Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 517-523 [2021-28576]
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
direct lines of responsibility for the
Credit and Treasury teams.
Therefore, the Commission finds that
the proposed rule change is consistent
with Rule 17Ad–22(e)(2)(i) and
(e)(2)(v).21
TKELLEY on DSK125TN23PROD with NOTICE
iii. Consistency With Rule 17Ad–
22(e)(3)(i) Under the Act
Rule 17Ad–22(e)(3)(i) requires that
ICE Clear Europe establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to,
among other things, maintain a sound
risk management framework for
comprehensively managing legal, credit,
liquidity, operational, general business,
investment, custody, and other risks
that arise in or are borne by ICE Clear
Europe, which includes risk
management policies, procedures, and
systems designed to identify, measure,
monitor, and manage the range of risks
that arise in or are borne by ICE Clear
Europe, that are subject to review on a
specified periodic basis and approved
by the board of directors annually.22 As
discussed above, the CC Risk Policy and
the CC Risk Procedures would describe
how ICE Clear Europe monitors and
mitigates counterparty credit risk. The
Commission believes that together these
documents would allow ICE Clear
Europe to comprehensively measure the
credit risk posed by Clearing Members
and FSPs through, among other things,
assessing prospective Clearing Members
and FSPs against certain credit
eligibility criteria. The Commission
further believes that CRS scores,
periodic reviews, trigger-based reviews,
and exposure limits would provide ICE
Clear Europe a comprehensive means of
monitoring the credit risk posed by
Clearing Members and FSPs. Finally,
the Commission believes that the
mitigating actions discussed above
would reduce or eliminate ICE Clear
Europe’s exposure to a Clearing Member
or FSP, thereby helping ICE Clear
Europe manage overall credit risk.
Therefore, the Commission finds that
the proposed rule change is consistent
with Rule 17Ad–22(e)(3)(i).23
iv. Consistency With Rule 17Ad–
22(e)(19) Under the Act
Rule 17Ad–22(e)(19) requires that ICE
Clear Europe establish, implement,
maintain, and enforce written policies
and procedures reasonably designed to
identify, monitor, and manage the
material risks to ICE Clear Europe
arising from arrangements in which
firms that are indirect participants in
21 17
CFR 240.17Ad–22(e)(2)(i) and (e)(2)(v).
CFR 240.17Ad–22(e)(3)(i).
23 17 CFR 240.17Ad–22(e)(3)(i).
22 17
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ICE Clear Europe rely on the services
provided by direct participants to access
ICE Clear Europe’s payment, clearing, or
settlement facilities.24 As discussed
above, the CC Risk Policy and the CC
Risk Procedures would require that ICE
Clear Europe monitor clients of Clearing
Members that are not affiliates of the
Clearing Member to consider whether
default of the client could cause the
default of the Clearing Member. The
Commission believes this would help
ICE Clear Europe to monitor and
manage the risks that clients, as indirect
participants, could pose to Clearing
Members, as direct participants in ICE
Clear Europe. The Commission further
believes that such client/Clearing
Member arrangements could pose
material risks to ICE Clear Europe
through its relationships with Clearing
Members.
Therefore, the Commission finds that
the proposed rule change is consistent
with Rule 17Ad–22(e)(19).25
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act, and in
particular, with the requirements of
Section 17A(b)(3)(F) of the Act,26 and
Rules 17Ad–22(e)(2)(i), (e)(2)(v),
(e)(3)(i), and (e)(19).27
It is therefore ordered pursuant to
Section 19(b)(2) of the Act 28 that the
proposed rule change (SR–ICEEU–2021–
015), be, and hereby is, approved.29
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021–28575 Filed 1–4–22; 8:45 am]
24 17
CFR 240.17Ad–22(e)(19).
CFR 240.17Ad–22(e)(19).
26 15 U.S.C. 78q–1(b)(3)(F).
27 17 CFR 240.17Ad–22(e)(2)(i), (e)(2)(v), (e)(3)(i),
and (e)(19).
28 15 U.S.C. 78s(b)(2).
29 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
30 17 CFR 200.30–3(a)(12).
25 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93881; File No. SR–MIAX–
2021–63]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule
December 30, 2021.
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 December 23, 2021, Miami
International Securities Exchange LLC
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX Options Fee Schedule
(the ‘‘Fee Schedule’’) to: (1) Extend the
waiver period for certain nontransaction fees applicable to Market
Makers 3 that trade solely in Proprietary
Products 4 until June 30, 2022; and (2)
extend the SPIKES Options Market
Maker Incentive Program (the
‘‘Incentive Program’’) until March 31,
2022.
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
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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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The term ‘‘Market Makers’’ refers to ‘‘Lead
Market Makers’’, ‘‘Primary Lead Market Makers’’
and ‘‘Registered Market Makers’’ collectively. See
Exchange Rule 100.
4 The term ‘‘Proprietary Product’’ means a class
of options that is listed exclusively on the
Exchange. See Exchange Rule 100.
2 17
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule to: (1) Extend the waiver
period for certain non-transaction fees
applicable to Market Makers that trade
solely in Proprietary Products until June
30, 2022; and (2) extend the Incentive
Program until March 31, 2022.
TKELLEY on DSK125TN23PROD with NOTICE
Background
On October 12, 2018, the Exchange
received approval from the Commission
to list and trade on the Exchange,
options on the SPIKES® Index, a new
index that measures expected 30-day
volatility of the SPDR S&P 500 ETF
Trust (commonly known and referred to
by its ticker symbol, ‘‘SPY’’).5 The
Exchange adopted its initial SPIKES
transaction fees on February 15, 2019
and adopted a new section of the Fee
Schedule—Section (1)(a)(xi), SPIKES—
for those fees.6 Options on the SPIKES
Index began trading on the Exchange on
February 19, 2019.
On May 31, 2019, the Exchange filed
its first proposal in a series of proposals
with the Commission to amend the Fee
Schedule to waive certain nontransaction fees applicable to Market
Makers that trade solely in Proprietary
Products (including options on the
SPIKES Index) beginning September 30,
5 See Securities Exchange Act Release No. 84417
(October 12, 2018), 83 FR 52865 (October 18, 2018)
(SR–MIAX–2018–14) (Order Granting Approval of a
Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the
Exchange Options on the SPIKES® Index).
6 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. On September 30, 2020, the
Exchange filed its proposal to, among other things,
reorganize the Fee Schedule to adopt new Section
(1)(b), Proprietary Products Exchange Fees, and
moved the fees and rebates for SPIKES options into
new Section (1)(b)(i). See Securities Exchange Act
Release No. 90146 (October 9, 2020), 85 FR 65443
(October 15, 2020) (SR–MIAX–2020–32); Securities
Exchange Act Release No. 90814 (December 29,
2020), 86 FR 327 (January 5, 2021) (SR–MIAX–
2020–39).
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2019, through December 31, 2021.7 In
particular, the Exchange adopted fee
waivers for Membership Application
fees, monthly Market Maker Trading
Permit fees, Application Programming
Interface (‘‘API’’) Testing and
Certification fees for Members,8 and
monthly MIAX Express Interface
(‘‘MEI’’) Port 9 fees assessed to Market
Makers that trade solely in Proprietary
Products (including options on SPIKES)
throughout the entire period of
September 30, 2019 through December
31, 2021. The Exchange now proposes
to extend the waiver period for the same
non-transaction fees applicable to
Market Makers that trade solely in
Proprietary Products (including options
on SPIKES) until June 30, 2022. In
particular, the Exchange proposes to
waive Membership Application fees,
monthly Market Maker Trading Permit
fees, Member API Testing and
Certification fees, and monthly MEI Port
fees assessed to Market Makers that
trade solely in Proprietary Products
(including options on SPIKES) until
June 30, 2022.
Membership Application Fees
The Exchange currently assesses
Membership fees for applications of
potential Members. The Exchange
assesses a one-time Membership
Application fee on the earlier of (i) the
date the applicant is certified in the
membership system, or (ii) once an
application for MIAX membership is
finally denied. The one-time application
fee is based upon the applicant’s status
as either a Market Maker or an
7 See Securities Exchange Act Release Nos. 86109
(June 14, 2019), 84 FR 28860 (June 20, 2019) (SR–
MIAX–2019–28); 87282 (October 10, 2019), 84 FR
55658 (October 17, 2019) (SR–MIAX–2019–43);
87897 (January 6, 2020), 85 FR 1346 (January 10,
2020) (SR–MIAX–2019–53); 89289 (July 10, 2020),
85 FR 43279 (July 16, 2020) (SR–MIAX–2020–22);
90146 (October 9, 2020), 85 FR 65443 (October 15,
2020) (SR–MIAX–2020–32); 90814 (December 29,
2020), 86 FR 327 (January 5, 2021) (SR–MIAX–
2020–39); 91498 (April 7, 2021), 86 FR 19293 (April
13, 2021) (SR–MIAX–2021–06).
8 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.
9 Full Service MEI Ports provide Market Makers
with the ability to send Market Maker simple and
complex quotes, eQuotes, and quote purge messages
to the MIAX System. Full Service MEI Ports are also
capable of receiving administrative information.
Market Makers are limited to two Full Service MEI
Ports per matching engine. See Fee Schedule, note
27.
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Electronic Exchange Member
(‘‘EEM’’).10 A Market Maker is assessed
a one-time Membership Application fee
of $3,000.
The Exchange proposes that the
waiver for the one-time Membership
Application fee of $3,000 for Market
Makers that trade solely in Proprietary
Products (including options on SPIKES)
will be extended from December 31,
2021 until June 30, 2022, which the
Exchange proposes to state in the Fee
Schedule. The purpose of this proposed
change is to continue to provide an
incentive for potential Market Makers to
submit membership applications, which
should result in an increase of potential
liquidity in Proprietary Products,
including options on SPIKES. Even
though the Exchange proposes to extend
the waiver of this particular fee, the
overall structure of the fee is outlined in
the Fee Schedule so that there is general
awareness that the Exchange intends to
assess such a fee after June 30, 2022.
Trading Permit Fees
The Exchange issues Trading Permits
that confer the ability to transact on the
Exchange. MIAX Trading Permits are
issued to Market Makers and EEMs.
Members receiving Trading Permits
during a particular calendar month are
assessed monthly Trading Permit fees as
set forth in the Fee Schedule. As it
relates to Market Makers, MIAX
currently assesses a monthly Trading
Permit fee in any month the Market
Maker is certified in the membership
system, is credentialed to use one or
more MIAX MEI Ports in the production
environment and is assigned to quote in
one or more classes. MIAX assesses the
monthly Market Maker Trading Permit
fee for its Market Makers based on the
greatest number of classes listed on
MIAX that the MIAX Market Maker was
assigned to quote in on any given day
within a calendar month and the
applicable fee rate is the lesser of either
the per class basis or percentage of total
national average daily volume
measurements. A MIAX Market Maker
is assessed a monthly Trading Permit
Fee according to the following table: 11
10 The term ‘‘Electronic Exchange Member’’ or
‘‘EEM’’ means the holder of a Trading Permit who
is not a Market Maker. Electronic Exchange
Members are deemed ‘‘members’’ under the
Exchange Act. See Exchange Rule 100.
11 See Fee Schedule, Section (3)(b).
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
Type of trading permit
Market Maker assignments
(the lesser of the applicable measurements below) W
Monthly MIAX
Trading Permit
Fee
Market Maker (includes
RMM, LMM, PLMM).
519
$7,000.00
12,000.00
* 17,000.00
* 22,000.00
Per class
% of National average daily volume
Up to 10 Classes ................................................
Up to 40 Classes ................................................
Up to 100 Classes ..............................................
Over 100 Classes ...............................................
Up to 20% of Classes by volume.
Up to 35% of Classes by volume.
Up to 50% of Classes by volume.
Over 50% of Classes by volume up to all
Classes listed on MIAX.
W Excludes Proprietary Products.
* For these Monthly MIAX Trading Permit Fee levels, if the Market Maker’s total monthly executed volume during the relevant month is less
than 0.060% of the total monthly executed volume reported by OCC in the market maker account type for MIAX-listed option classes for that
month, then the fee will be $15,500 instead of the fee otherwise applicable to such level.
MIAX proposes that the waiver for the
monthly Trading Permit fee for Market
Makers that trade solely in Proprietary
Products (including options on SPIKES)
will be extended from December 31,
2021, to June 30, 2022, which the
Exchange proposes to state in the Fee
Schedule. The purpose of this proposed
change is to continue to provide an
incentive for Market Makers to provide
liquidity in Proprietary Products on the
Exchange, which should result in
increasing potential order flow and
volume in Proprietary Products,
including options on SPIKES. Even
though the Exchange proposes to extend
the waiver of this particular fee, the
overall structure of the fee is outlined in
the Fee Schedule so that there is general
awareness by potential Members
seeking a Trading Permit that the
Exchange intends to assess such a fee
after June 30, 2022.
The Exchange also proposes that
Market Makers who trade Proprietary
Products (including options on SPIKES)
along with multi-listed classes will
continue to not have Proprietary
Products (including SPIKES) counted
toward those Market Makers’ class
assignment count or percentage of total
national average daily volume. This
exclusion is noted with the symbol ‘‘W’’
following the table that shows the
monthly Trading Permit fees currently
assessed to Market Makers in Section
(3)(b) of the Fee Schedule.
TKELLEY on DSK125TN23PROD with NOTICE
API Testing and Certification Fee
The Exchange assesses an API Testing
and Certification fee to all Members
depending upon Membership type. An
API makes it possible for Members’
software to communicate with MIAX
software applications, and is subject to
Members testing with, and certification
by, MIAX. The Exchange offers four
types of interfaces: (i) The Financial
Information Exchange Port (‘‘FIX
Port’’),12 which enables the FIX Port
12 A FIX Port is an interface with MIAX systems
that enables the Port user (typically an Electronic
Exchange Member or a Market Maker) to submit
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user (typically an EEM or a Market
Maker) to submit simple and complex
orders electronically to MIAX; (ii) the
MEI Port, which enables Market Makers
to submit simple and complex
electronic quotes to MIAX; (iii) the
Clearing Trade Drop Port (‘‘CTD
Port’’),13 which provides real-time trade
clearing information to the participants
to a trade on MIAX and to the
participants’ respective clearing firms;
and (iv) the FIX Drop Copy Port (‘‘FXD
Port’’),14 which provides a copy of realtime trade execution, correction and
cancellation information through a FIX
Port to any number of FIX Ports
designated by an EEM to receive such
messages.
API Testing and Certification fees for
Market Makers are assessed (i) initially
per API for CTD and MEI ports in the
month the Market Maker has been
credentialed to use one or more ports in
the production environment for the
tested API and the Market Maker has
been assigned to quote in one or more
simple and complex orders electronically to MIAX.
See Fee Schedule, note 24.
13 Clearing Trade Drop (‘‘CTD’’) provides
Exchange members with real-time clearing trade
updates. The updates include the Member’s
clearing trade messages on a low latency, real-time
basis. The trade messages are routed to a Member’s
connection containing certain information. The
information includes, among other things, the
following: (i) Trade date and time; (ii) symbol
information; (iii) trade price/size information; (iv)
Member type (for example, and without limitation,
Market Maker, Electronic Exchange Member,
Broker-Dealer); (v) Exchange Member Participant
Identifier (‘‘MPID’’) for each side of the transaction,
including Clearing Member MPID; and (vi) strategy
specific information for complex transactions. CTD
Port Fees will be assessed in any month the
Member is credentialed to use the CTD Port in the
production environment. See Fee Schedule, Section
(5)(d)(iii).
14 The FIX Drop Copy Port (‘‘FXD’’) is a
messaging interface that will provide a copy of realtime trade execution, trade correction and trade
cancellation information for simple and complex
orders to FIX Drop Copy Port users who subscribe
to the service. FIX Drop Copy Port users are those
users who are designated by an EEM to receive the
information and the information is restricted for use
by the EEM only. FXD Port Fees will be assessed
in any month the Member is credentialed to use the
FXD Port in the production environment. See Fee
Schedule, Section (5)(d)(iv).
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classes, and (ii) each time a Market
Maker initiates a change to its system
that requires testing and certification.
API Testing and Certification fees will
not be assessed in situations where the
Exchange initiates a mandatory change
to the Exchange’s system that requires
testing and certification. The Exchange
currently assesses a Market Maker an
API Testing and Certification fee of
$2,500. The API Testing and
Certification fees represent costs
incurred by the Exchange as it works
with each Member for testing and
certifying that the Member’s software
systems communicate properly with
MIAX’s interfaces.
MIAX proposes to extend the waiver
of the API Testing and Certification fee
for Market Makers that trade solely in
Proprietary Products (including options
on SPIKES) from December 31, 2021,
until June 30, 2022, which the Exchange
proposes to state in the Fee Schedule.
The purpose of this proposed change is
to continue to provide an incentive for
potential Market Makers to develop
software applications to trade in
Proprietary Products, including options
on SPIKES. Even though the Exchange
proposes to extend the waiver of this
particular fee, the overall structure of
the fee is outlined in the Fee Schedule
so that there is general awareness that
the Exchange intends to assess such a
fee after June 30, 2022.
MEI Port Fees
MIAX assesses monthly MEI Port fees
to Market Makers in each month the
Member has been credentialed to use
the MEI Port in the production
environment and has been assigned to
quote in at least one class. The amount
of the monthly MEI Port fee is based
upon the number of classes in which the
Market Maker was assigned to quote on
any given day within the calendar
month, and upon the class volume
percentages set forth in the table below.
The class volume percentage is based on
the total national average daily volume
in classes listed on MIAX in the prior
calendar quarter. Newly listed option
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Notices
classes are excluded from the
calculation of the monthly MEI Port fee
until the calendar quarter following
their listing, at which time the newly
listed option classes will be included in
both the per class count and the
percentage of total national average
daily volume. The Exchange assesses
MIAX Market Makers the monthly MEI
Port fee based on the greatest number of
classes listed on MIAX that the MIAX
Market Maker was assigned to quote in
on any given day within a calendar
month and the applicable fee rate that
Market Maker assignments
(the lesser of the applicable measurements below) W
Monthly MIAX
MEI fees
$5,000.00 .............................
$10,000.00 ...........................
$14,000.00 ...........................
$17,500.00 * .........................
$20,500.00 * .........................
is the lesser of either the per class basis
or percentage of total national average
daily volume measurement. MIAX
assesses MEI Port fees on Market Makers
according to the following table: 15
Per class
% of National average daily volume
Up to 5 Classes ..............................................................
Up to 10 Classes ............................................................
Up to 40 Classes ............................................................
Up to 100 Classes ..........................................................
Over 100 Classes ...........................................................
Up to 10% of Classes by volume.
Up to 20% of Classes by volume.
Up to 35% of Classes by volume.
Up to 50% of Classes by volume.
Over 50% of Classes by volume up to all Classes listed
on MIAX.
TKELLEY on DSK125TN23PROD with NOTICE
W Excludes Proprietary Products.
* For these Monthly MIAX MEI Fees levels, if the Market Maker’s total monthly executed volume during the relevant month is less than 0.060%
of the total monthly executed volume reported by OCC in the market maker account type for MIAX-listed option classes for that month, then the
fee will be $14,500 instead of the fee otherwise applicable to such level.
MIAX proposes to extend the waiver
of the monthly MEI Port fee for Market
Makers that trade solely in Proprietary
Products (including options on SPIKES)
from December 31, 2021, until June 30,
2022, which the Exchange proposes to
state in the Fee Schedule. The purpose
of this proposal is to continue to
provide an incentive to Market Makers
to connect to MIAX through the MEI
Port such that they will be able to trade
in MIAX Proprietary Products. Even
though the Exchange proposes to extend
the waiver of this particular fee, the
overall structure of the fee is outlined in
the Fee Schedule so that there is general
awareness that the Exchange intends to
assess such a fee after June 30, 2022.
The Exchange notes that for the
purposes of this proposed change, other
Market Makers who trade MIAX
Proprietary Products (including options
on SPIKES) along with multi-listed
classes will continue to not have
Proprietary Products (including SPIKES)
counted toward those Market Makers’
class assignment count or percentage of
total national average daily volume.
This exclusion is noted by the symbol
‘‘W’’ following the table that shows the
monthly MEI Port Fees currently
assessed for Market Makers in Section
(5)(d)(ii) of the Fee Schedule.
The proposed extension of the fee
waivers are targeted at market
participants, particularly market
makers, who are not currently members
of MIAX, who may be interested in
being a Market Maker in Proprietary
Products on the Exchange. The
15 See
Fee Schedule (5)(d)(ii).
SR–MIAX–2021–45.
17 See MIAX Options Regulatory Circular 2021–
56, SPIKES Options Market Maker Incentive
Program (September 30, 2021) available at https://
16 See
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Exchange estimates that there are fewer
than ten (10) such market participants
that could benefit from the extension of
these fee waivers. The proposed
extension of the fee waivers does not
apply differently to different sizes of
market participants, however the fee
waivers do only apply to Market Makers
(and not EEMs).
Market Makers, unlike other market
participants, take on a number of
obligations, including quoting
obligations that other market
participants do not have. Further,
Market Makers have added market
making and regulatory requirements,
which normally do not apply to other
market participants. For example,
Market Makers have obligations to
maintain continuous markets, engage in
a course of dealings reasonably
calculated to contribute to the
maintenance of a fair and orderly
market, and to not make bids or offers
or enter into transactions that are
inconsistent with a course of dealing.
Accordingly, the Exchange believes it is
reasonable and not unfairly
discriminatory to continue to offer the
fee waivers to Market Makers because
the Exchange is seeking additional
liquidity providers for Proprietary
Products, in order to enhance liquidity
and spreads in Proprietary Products,
which is traditionally provided by
Market Makers, as opposed to EEMs.
Incentive Program Extension
On September 30, 2021, the Exchange
filed its initial proposal to implement a
www.miaxoptions.com/sites/default/files/
circularfiles/MIAX_Options_RC_2021_56.pdf.
18 See Securities Exchange Act Release No. 93424
(October 26, 2021), 86 FR 60322 (November 1, 2021)
(SR–MIAX–2021–49).
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SPIKES Options Market Maker Incentive
Program for SPIKES options to
incentivize Market Makers to improve
liquidity, available volume, and the
quote spread width of SPIKES options
beginning October 1, 2021, and ending
December 31, 2021.16 Technical details
regarding the Incentive Program were
published in a Regulatory Circular on
September 30, 2021.17 On October 12,
2021, the Exchange withdrew SR–
MIAX–2021–45 and refiled its proposal
to implement the Incentive Program to
provide additional details.18 In that
filing, the Exchange specifically noted
that the Incentive Program would expire
at the end of the period (December 31,
2021) unless the Exchange filed another
19b–4 Filing to amend the fees (or
extend the Incentive Program).19 The
Exchange now proposes to extend the
Incentive Program for three months,
with the Incentive Program ending on
March 31, 2022.20
The Exchange proposes to extend the
Incentive Program for SPIKES options to
continue to incentivize Market Makers
to improve liquidity, available volume,
and the quote spread width of SPIKES
options. Currently, to be eligible to
participate in the Incentive Program, a
Market Maker must meet certain
minimum requirements related to quote
spread width in certain in-the-money
(ITM) and out-of-the-money (OTM)
options as determined by the Exchange
and communicated to Members via
19 See
id., at note 4.
Exchange notes that at the end of the
extension period, the Incentive Program will expire
unless the Exchange files another 19b–4 Filing to
amend the terms or extend the Incentive Program.
20 The
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Regulatory Circular.21 Market Makers
must also satisfy a minimum time in the
market in the front 2 expiry months of
70%, and have an average quote size of
25 contracts. The Exchange established
two separate incentive compensation
pools that are used to compensate
Market Makers that satisfy the criteria
pursuant to the Incentive Program.
The first pool (Incentive 1) has a total
amount of $40,000 per month, which is
allocated to Market Makers that meet
the minimum requirements of the
Incentive Program. Market Makers are
required to meet minimum spread
width requirements in a select number
of ITM and OTM SPIKES option
contracts as determined by the
Exchange and communicated to
Members via Regulatory Circular.22 A
complete description of how the
Exchange calculates the minimum
spread width requirements in ITM and
OTM SPIKES options can be found in
the published Regulatory Circular.23
Market Makers are also required to
maintain the minimum spread width,
described above, for at least 70% of the
time in the front two (2) SPIKES options
contract expiry months and maintain an
average quote size of at least 25 SPIKES
options contracts. The amount available
to each individual Market Maker is
capped at $10,000 per month for
satisfying the minimum requirements of
the Incentive Program. In the event that
more than four Market Makers meet the
requirements of the Incentive Program,
each qualifying Market Maker is entitled
to receive a pro-rated share of the
$40,000 monthly compensation pool
dependent upon the number of
qualifying Market Makers in that
particular month.
The second pool (Incentive 2 Pool) is
capped at a total amount of $100,000
per month which is used during the
Incentive Program to further incentivize
Market Makers who meet or exceed the
requirements of Incentive 1 (‘‘qualifying
Market Makers’’) to provide tighter
quote width spreads. The Exchange
ranks each qualifying Market Maker’s
quote width spread relative to each
other qualifying Market Maker’s quote
width spread. Market Makers with
tighter spreads in certain strikes, as
determined by the Exchange and
communicated to Members via
Regulatory Circular,24 are eligible to
receive a pro-rated share of the
compensation pool as calculated by the
Exchange and communicated to
supra note 17.
id.
23 See id.
24 See id.
Members via Regulatory Circular,25 not
to exceed $25,000 per Member per
month. Qualifying Market Makers are
ranked relative to each other based on
the quality of their spread width (i.e.,
tighter spreads are ranked higher than
wider spreads) and the Market Maker
with the best quality spread width
receives the highest rebate, while other
eligible qualifying Market Makers
receive a rebate relative to their quality
spread width.
The Exchange now proposes to extend
the Incentive Program until March 31,
2022. The Exchange does not propose to
make any amendments to how it
calculates any of the incentives
provided for in Incentive Pools 1 or 2.
The details of the Incentive Program can
continue to be found in the Regulatory
Circular that was published on
September 30, 2021 to all Exchange
Members.26 The purpose of this
extension is to continue to incentivize
Market Makers to improve liquidity,
available volume, and the quote spread
width of SPIKES options. The Exchange
will announce the extension of the
Incentive Program to all Members via a
Regulatory Circular.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 27
in general, and furthers the objectives of
Section 6(b)(4) of the Act 28 in
particular, in that it is an equitable
allocation of reasonable 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, 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 customers,
issuers, brokers and dealers.
The Exchange believes that the
proposal to extend the fee waiver period
for certain non-transaction fees for
Market Makers in Proprietary Products
is an equitable allocation of reasonable
fees because the proposal continues to
waive non-transaction fees for a limited
period of time in order to enable the
Exchange to improve its overall
competitiveness and strengthen its
market quality for all market
21 See
25 See
22 See
26 See
VerDate Sep<11>2014
18:05 Jan 04, 2022
id.
id.
27 15 U.S.C. 78f(b).
28 15 U.S.C. 78f(b)(4) and (5).
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521
participants in MIAX’s Proprietary
Products, including options on SPIKES.
The Exchange believe the proposed
extension of the fee waivers is fair and
equitable and not unreasonably
discriminatory because it applies to all
market participants not currently
registered as Market Makers at the
Exchange. Any market participant may
choose to satisfy the additional
requirements and obligations of being a
Market Maker and trade solely in
Proprietary Products in order to qualify
for the fee waivers.
The Exchange believes that the
proposed extension of the fee waivers is
equitable and not unfairly
discriminatory for Market Makers as
compared to EEMs because Market
Makers, unlike other market
participants, take on a number of
obligations, including quoting
obligations that other market
participants do not have. Further,
Market Makers have added market
making and regulatory requirements,
which normally do not apply to other
market participants. For example,
Market Makers have obligations to
maintain continuous markets, engage in
a course of dealings reasonably
calculated to contribute to the
maintenance of a fair and orderly
market, and to not make bids or offers
or enter into transactions that are
inconsistent with a course of dealing.
The Exchange believes it is reasonable
and equitable to continue to waive the
one-time Membership Application Fee,
monthly Trading Permit Fee, API
Testing and Certification Fee, and
monthly MEI Port Fee for Market
Makers that trade solely in Proprietary
Products (including options on SPIKES)
until June 30, 2022, since the waiver of
such fees provides incentives to
interested market participants to trade
in Proprietary Products. This should
result in increasing potential order flow
and liquidity in MIAX Proprietary
Products, including options on SPIKES.
The Exchange believes it is reasonable
and equitable to continue to waive the
API Testing and Certification fee
assessable to Market Makers that trade
solely in Proprietary Products
(including options on SPIKES) until
June 30, 2022, since the waiver of such
fees provides incentives to interested
Members to develop and test their APIs
sooner. Determining system operability
with the Exchange’s system will in turn
provide MIAX with potential order flow
and liquidity providers in Proprietary
Products.
The Exchange believes it is
reasonable, equitable and not unfairly
discriminatory that Market Makers who
trade in Proprietary Products along with
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multi-listed classes will continue to not
have Proprietary Products counted
toward those Market Makers’ class
assignment count or percentage of total
national average daily volume for
monthly Trading Permit Fees and
monthly MEI Port Fees in order to
incentivize existing Market Makers who
currently trade in multi-listed classes to
also trade in Proprietary Products,
without incurring certain additional
fees.
The Exchange believes that the
proposed extension of the fee waivers
constitutes an equitable allocation of
reasonable fees and other charges among
its members and issuers and other
persons using its facilities. The
proposed extension of the fee waivers
means that all prospective market
makers that wish to become Market
Maker Members of the Exchange and
quote solely in Proprietary Products
may do so and have the abovementioned fees waived until June 30,
2022. The proposed extension of the fee
waivers will continue to not apply to
potential EEMs because the Exchange is
seeking to enhance the quality of its
markets in Proprietary Products through
introducing more competition among
Market Makers in Proprietary Products.
In order to increase the competition, the
Exchange believes that it must continue
to waive entry type fees for such Market
Makers. EEMs do not provide the
benefit of enhanced liquidity which is
provided by Market Makers, therefore
the Exchange believes it is reasonable
and not unfairly discriminatory to
continue to only offer the proposed fee
waivers to Market Makers (and not
EEMs). Further, the Exchange believes it
is reasonable and not unfairly
discriminatory to continue to exclude
Proprietary Products from an existing
Market Maker’s permit fees and port
fees, in order to incentive such Market
Makers to quote in Proprietary Products.
The amount of a Market Maker’s permit
and port fee is determined by the
number of classes quoted and volume of
the Market Maker. By excluding
Proprietary Products from such fees, the
Exchange is able to incentivize Market
Makers to quote in Proprietary Products.
EEMs do not pay permit and port fees
based on the classes traded or volume,
so the Exchange believes it is
reasonable, equitable, and not unfairly
discriminatory to only offer the
exclusion to Market Makers (and not
EEMs).
The Exchange believes that it is
reasonable, equitable, and not unfairly
discriminatory to extend the Incentive
Program for Market Makers in SPIKES
options. The Incentive Program is
reasonably designed because it will
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18:05 Jan 04, 2022
Jkt 256001
continue to incentivize Market Makers
to provide quotes and increased
liquidity in select SPIKES options
contracts. The Incentive Program is
reasonable, equitably allocated and not
unfairly discriminatory because all
Market Makers in SPIKES options may
continue to qualify for Incentive 1 and
Incentive 2, dependent upon each
Market Maker’s quoting in SPIKES
options in a particular month.
Additionally, if a SPIKES Market Maker
does not satisfy the requirements of
Incentive Pool 1 or 2, then it simply will
not receive the rebate offered by the
Incentive Program for that month.
The Exchange believes that it is
reasonable, equitable and not unfairly
discriminatory to continue to offer this
financial incentive to SPIKES Market
Makers because it will continue to
benefit all market participants trading in
SPIKES. SPIKES Options is a
Proprietary Product on the Exchange
and the continuation of the Incentive
Program encourages SPIKES Market
Makers to satisfy a heightened quoting
standard, average quote size, and time
in market. A continued increase in
quoting activity and tighter quotes may
yield a corresponding increase in order
flow from other market participants,
which benefits all investors by
deepening the Exchange’s liquidity
pool, potentially providing greater
execution incentives and opportunities,
while promoting market transparency
and improving investor protection.
The Exchange believes that the
Incentive Program is equitable and not
unfairly discriminatory because it will
continue to promote an increase in
SPIKES options liquidity, which may
facilitate tighter spreads and an increase
in trading opportunities to the benefit of
all market participants. The Exchange
believes it is reasonable to operate the
Incentive Program for a continued
limited period of time to strengthen
market quality for all market
participants. The resulting increased
volume and liquidity will benefit those
Members who are eligible to participate
in the Incentive Program and will also
continue to benefit those Members who
are not eligible to participate in the
Incentive Program by providing more
trading opportunities and tighter
spreads.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
Intra-Market Competition
The Exchange believes that the
proposal to extend certain of the nontransaction fee waivers until June 30,
2022 for Market Makers that trade solely
in Proprietary Products would increase
intra-market competition by
incentivizing new potential Market
Makers to quote in Proprietary Products,
which will enhance the quality of
quoting and increase the volume of
contracts in Proprietary Products traded
on MIAX, including options on SPIKES.
To the extent that this purpose is
achieved, all the Exchange’s market
participants should benefit from the
improved market liquidity for the
Exchange’s Proprietary Products.
Enhanced market quality and increased
transaction volume in Proprietary
Products that results from the
anticipated increase in Market Maker
activity on the Exchange will benefit all
market participants and improve
competition on the Exchange.
The Exchange does not believe that
the proposed rule change will impose
any burden on intra-market competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed changes for each
separate type of market participant (new
Market Makers and existing Market
Makers) will be assessed equally to all
such market participants. While
different fees are assessed to different
market participants in some
circumstances, these different market
participants have different obligations
and different circumstances as
discussed above. For example, Market
Makers have quoting obligations that
other market participants (such as
EEMs) do not have.
The Exchange believes that the
proposed extension of the Incentive
Program would continue to increase
intra-market competition by
incentivizing Market Makers to quote
SPIKES options, which will continue to
enhance the quality of quoting and
increase the volume of contracts
available to trade in SPIKES options. To
the extent that this purpose is achieved,
all the Exchange’s market participants
should benefit from the improved
market liquidity for SPIKES options.
Enhanced market quality and increased
transaction volume in SPIKES options
that results from the anticipated
increase in Market Maker activity on the
Exchange will benefit all market
participants and improve competition
on the Exchange.
Inter-Market Competition
The Exchange does not believe that
the proposed rule changes will impose
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any burden on inter-market competition
that is not necessary or appropriate in
furtherance of the purposes of the Act
because the proposed extension of the
fee waivers and the extension of the
Incentive Program apply only to the
Exchange’s Proprietary Products
(including options on SPIKES), which
are traded exclusively on 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,29 and Rule
19b–4(f)(2) 30 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:
TKELLEY on DSK125TN23PROD with NOTICE
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–2021–63 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–2021–63. 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
29 15
30 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
18:05 Jan 04, 2022
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–2021–63, and
should be submitted on or before
January 26, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Eduardo A. Aleman,
Deputy Secretary.
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
modify its Fee Schedule to establish
fees, as of January 3, 2022, for the
receipt and distribution of proprietary
market data feeds. The proposed rule
change was published for comment in
the Federal Register on November 17,
2021.3 Pursuant to Section 19(b)(3)(C) of
the Act,4 the Commission is hereby
temporarily suspending File No. SR–
IEX–2021–14 and instituting
proceedings to determine whether to
approve or disapprove File No. SR–IEX–
2021–14.
II. Description of the Proposed Rule
Change
IEX offers two real-time proprietary
market data feeds, ‘‘TOPS’’ 5 and
‘‘DEEP’’ 6 (collectively, ‘‘IEX Data’’ or
the ‘‘market data feeds’’).7 DEEP
includes all resting displayed liquidity
on the Exchange aggregated by price
level and it therefore includes the top of
book quotes contained in TOPS, as well
as less aggressively priced displayed
quotes. IEX has not previously imposed
fees to access or redistribute its market
data feeds.8
The Exchange proposes to modify its
Fee Schedule to assess fees on Data
Subscribers 9 that access IEX Data in
real-time.10 As discussed below, IEX
would not itself provide or impose a fee
for time-delayed IEX Data.11 The
Exchange proposes to implement these
fees on January 3, 2022.
Specifically, IEX proposes to assess
Data Subscribers $2,500 per month for
its ‘‘Real-Time’’ DEEP feed and $500 per
[FR Doc. 2021–28576 Filed 1–4–22; 8:45 am]
1 15
BILLING CODE 8011–01–P
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 93557
(November 10, 2021), 86 FR 64268 (November 17,
2021).
4 15 U.S.C. 78s(b)(3)(C).
5 TOPS is an uncompressed data feed that offers
aggregated top of book quotations for all displayed
orders resting on the IEX Order Book and last sale
information for executions on the Exchange. See
Notice, supra note 3, at 64269. According to the
Exchange, the data available through TOPS is also
available through the securities information
processor feed. See id.
6 DEEP is an uncompressed data feed that
provides aggregated depth of book quotations for all
displayed orders resting on the IEX Order Book at
each price level and last sale information for
executions on the Exchange. See Notice, supra note
3, at 64269.
7 See Notice, supra note 3, at 64269.
8 See id.
9 The Exchange proposes to define the term ‘‘Data
Subscriber’’ as ‘‘any natural person or entity that
receives Real-Time IEX market data either directly
from the Exchange or from another Data
Subscriber.’’ See Notice, supra note 3, at 64274. IEX
will require Data Subscribers to enter into a Data
Subscriber Agreement with IEX in order to receive
Real-Time IEX Data. See id. at 64270, n.23.
10 See Notice, supra note 3, at 64269.
11 See Notice, supra note 3, at 64270, n.22.
2 17
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93883; File No. SR–IEX–
2021–14]
Self-Regulatory Organizations;
Investors Exchange LLC; Suspension
of and Order Instituting Proceedings
To Determine Whether To Approve or
Disapprove a Proposed Rule Change
To Amend Its Fee Schedule for Market
Data Fees
December 30, 2021.
I. Introduction
On November 1, 2021, Investors
Exchange LLC (‘‘IEX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
31 17
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CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Notices]
[Pages 517-523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28576]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93881; File No. SR-MIAX-2021-63]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
December 30, 2021.
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 December 23, 2021, Miami International
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') a proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the Exchange. The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Options Fee
Schedule (the ``Fee Schedule'') to: (1) Extend the waiver period for
certain non-transaction fees applicable to Market Makers \3\ that trade
solely in Proprietary Products \4\ until June 30, 2022; and (2) extend
the SPIKES Options Market Maker Incentive Program (the ``Incentive
Program'') until March 31, 2022.
---------------------------------------------------------------------------
\3\ The term ``Market Makers'' refers to ``Lead Market Makers'',
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
\4\ The term ``Proprietary Product'' means a class of options
that is listed exclusively on the Exchange. See Exchange Rule 100.
---------------------------------------------------------------------------
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
[[Page 518]]
places specified in Item IV below. The Exchange has prepared summaries,
set forth in sections A, B, and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule to: (1) Extend the
waiver period for certain non-transaction fees applicable to Market
Makers that trade solely in Proprietary Products until June 30, 2022;
and (2) extend the Incentive Program until March 31, 2022.
Background
On October 12, 2018, the Exchange received approval from the
Commission to list and trade on the Exchange, options on the
SPIKES[supreg] Index, a new index that measures expected 30-day
volatility of the SPDR S&P 500 ETF Trust (commonly known and referred
to by its ticker symbol, ``SPY'').\5\ The Exchange adopted its initial
SPIKES transaction fees on February 15, 2019 and adopted a new section
of the Fee Schedule--Section (1)(a)(xi), SPIKES--for those fees.\6\
Options on the SPIKES Index began trading on the Exchange on February
19, 2019.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 84417 (October 12,
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order
Granting Approval of a Proposed Rule Change by Miami International
Securities Exchange, LLC to List and Trade on the Exchange Options
on the SPIKES[supreg] Index).
\6\ 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. On
September 30, 2020, the Exchange filed its proposal to, among other
things, reorganize the Fee Schedule to adopt new Section (1)(b),
Proprietary Products Exchange Fees, and moved the fees and rebates
for SPIKES options into new Section (1)(b)(i). See Securities
Exchange Act Release No. 90146 (October 9, 2020), 85 FR 65443
(October 15, 2020) (SR-MIAX-2020-32); Securities Exchange Act
Release No. 90814 (December 29, 2020), 86 FR 327 (January 5, 2021)
(SR-MIAX-2020-39).
---------------------------------------------------------------------------
On May 31, 2019, the Exchange filed its first proposal in a series
of proposals with the Commission to amend the Fee Schedule to waive
certain non-transaction fees applicable to Market Makers that trade
solely in Proprietary Products (including options on the SPIKES Index)
beginning September 30, 2019, through December 31, 2021.\7\ In
particular, the Exchange adopted fee waivers for Membership Application
fees, monthly Market Maker Trading Permit fees, Application Programming
Interface (``API'') Testing and Certification fees for Members,\8\ and
monthly MIAX Express Interface (``MEI'') Port \9\ fees assessed to
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) throughout the entire period of September 30, 2019
through December 31, 2021. The Exchange now proposes to extend the
waiver period for the same non-transaction fees applicable to Market
Makers that trade solely in Proprietary Products (including options on
SPIKES) until June 30, 2022. In particular, the Exchange proposes to
waive Membership Application fees, monthly Market Maker Trading Permit
fees, Member API Testing and Certification fees, and monthly MEI Port
fees assessed to Market Makers that trade solely in Proprietary
Products (including options on SPIKES) until June 30, 2022.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release Nos. 86109 (June 14,
2019), 84 FR 28860 (June 20, 2019) (SR-MIAX-2019-28); 87282 (October
10, 2019), 84 FR 55658 (October 17, 2019) (SR-MIAX-2019-43); 87897
(January 6, 2020), 85 FR 1346 (January 10, 2020) (SR-MIAX-2019-53);
89289 (July 10, 2020), 85 FR 43279 (July 16, 2020) (SR-MIAX-2020-
22); 90146 (October 9, 2020), 85 FR 65443 (October 15, 2020) (SR-
MIAX-2020-32); 90814 (December 29, 2020), 86 FR 327 (January 5,
2021) (SR-MIAX-2020-39); 91498 (April 7, 2021), 86 FR 19293 (April
13, 2021) (SR-MIAX-2021-06).
\8\ 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.
\9\ Full Service MEI Ports provide Market Makers with the
ability to send Market Maker simple and complex quotes, eQuotes, and
quote purge messages to the MIAX System. Full Service MEI Ports are
also capable of receiving administrative information. Market Makers
are limited to two Full Service MEI Ports per matching engine. See
Fee Schedule, note 27.
---------------------------------------------------------------------------
Membership Application Fees
The Exchange currently assesses Membership fees for applications of
potential Members. The Exchange assesses a one-time Membership
Application fee on the earlier of (i) the date the applicant is
certified in the membership system, or (ii) once an application for
MIAX membership is finally denied. The one-time application fee is
based upon the applicant's status as either a Market Maker or an
Electronic Exchange Member (``EEM'').\10\ A Market Maker is assessed a
one-time Membership Application fee of $3,000.
---------------------------------------------------------------------------
\10\ The term ``Electronic Exchange Member'' or ``EEM'' means
the holder of a Trading Permit who is not a Market Maker. Electronic
Exchange Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
---------------------------------------------------------------------------
The Exchange proposes that the waiver for the one-time Membership
Application fee of $3,000 for Market Makers that trade solely in
Proprietary Products (including options on SPIKES) will be extended
from December 31, 2021 until June 30, 2022, which the Exchange proposes
to state in the Fee Schedule. The purpose of this proposed change is to
continue to provide an incentive for potential Market Makers to submit
membership applications, which should result in an increase of
potential liquidity in Proprietary Products, including options on
SPIKES. Even though the Exchange proposes to extend the waiver of this
particular fee, the overall structure of the fee is outlined in the Fee
Schedule so that there is general awareness that the Exchange intends
to assess such a fee after June 30, 2022.
Trading Permit Fees
The Exchange issues Trading Permits that confer the ability to
transact on the Exchange. MIAX Trading Permits are issued to Market
Makers and EEMs. Members receiving Trading Permits during a particular
calendar month are assessed monthly Trading Permit fees as set forth in
the Fee Schedule. As it relates to Market Makers, MIAX currently
assesses a monthly Trading Permit fee in any month the Market Maker is
certified in the membership system, is credentialed to use one or more
MIAX MEI Ports in the production environment and is assigned to quote
in one or more classes. MIAX assesses the monthly Market Maker Trading
Permit fee for its Market Makers based on the greatest number of
classes listed on MIAX that the MIAX Market Maker was assigned to quote
in on any given day within a calendar month and the applicable fee rate
is the lesser of either the per class basis or percentage of total
national average daily volume measurements. A MIAX Market Maker is
assessed a monthly Trading Permit Fee according to the following table:
\11\
---------------------------------------------------------------------------
\11\ See Fee Schedule, Section (3)(b).
[[Page 519]]
----------------------------------------------------------------------------------------------------------------
Market Maker assignments (the lesser of the applicable
Monthly MIAX measurements below) [Omega]
Type of trading permit Trading Permit ---------------------------------------------------------
Fee % of National average daily
Per class volume
----------------------------------------------------------------------------------------------------------------
Market Maker (includes RMM, LMM, $7,000.00 Up to 10 Classes........... Up to 20% of Classes by
PLMM). 12,000.00 Up to 40 Classes........... volume.
Up to 35% of Classes by
volume.
* 17,000.00 Up to 100 Classes.......... Up to 50% of Classes by
volume.
* 22,000.00 Over 100 Classes........... Over 50% of Classes by
volume up to all Classes
listed on MIAX.
----------------------------------------------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX Trading Permit Fee levels, if the Market Maker's total monthly executed volume during
the relevant month is less than 0.060% of the total monthly executed volume reported by OCC in the market
maker account type for MIAX-listed option classes for that month, then the fee will be $15,500 instead of the
fee otherwise applicable to such level.
MIAX proposes that the waiver for the monthly Trading Permit fee
for Market Makers that trade solely in Proprietary Products (including
options on SPIKES) will be extended from December 31, 2021, to June 30,
2022, which the Exchange proposes to state in the Fee Schedule. The
purpose of this proposed change is to continue to provide an incentive
for Market Makers to provide liquidity in Proprietary Products on the
Exchange, which should result in increasing potential order flow and
volume in Proprietary Products, including options on SPIKES. Even
though the Exchange proposes to extend the waiver of this particular
fee, the overall structure of the fee is outlined in the Fee Schedule
so that there is general awareness by potential Members seeking a
Trading Permit that the Exchange intends to assess such a fee after
June 30, 2022.
The Exchange also proposes that Market Makers who trade Proprietary
Products (including options on SPIKES) along with multi-listed classes
will continue to not have Proprietary Products (including SPIKES)
counted toward those Market Makers' class assignment count or
percentage of total national average daily volume. This exclusion is
noted with the symbol ``[Omega]'' following the table that shows the
monthly Trading Permit fees currently assessed to Market Makers in
Section (3)(b) of the Fee Schedule.
API Testing and Certification Fee
The Exchange assesses an API Testing and Certification fee to all
Members depending upon Membership type. An API makes it possible for
Members' software to communicate with MIAX software applications, and
is subject to Members testing with, and certification by, MIAX. The
Exchange offers four types of interfaces: (i) The Financial Information
Exchange Port (``FIX Port''),\12\ which enables the FIX Port user
(typically an EEM or a Market Maker) to submit simple and complex
orders electronically to MIAX; (ii) the MEI Port, which enables Market
Makers to submit simple and complex electronic quotes to MIAX; (iii)
the Clearing Trade Drop Port (``CTD Port''),\13\ which provides real-
time trade clearing information to the participants to a trade on MIAX
and to the participants' respective clearing firms; and (iv) the FIX
Drop Copy Port (``FXD Port''),\14\ which provides a copy of real-time
trade execution, correction and cancellation information through a FIX
Port to any number of FIX Ports designated by an EEM to receive such
messages.
---------------------------------------------------------------------------
\12\ A FIX Port is an interface with MIAX systems that enables
the Port user (typically an Electronic Exchange Member or a Market
Maker) to submit simple and complex orders electronically to MIAX.
See Fee Schedule, note 24.
\13\ Clearing Trade Drop (``CTD'') provides Exchange members
with real-time clearing trade updates. The updates include the
Member's clearing trade messages on a low latency, real-time basis.
The trade messages are routed to a Member's connection containing
certain information. The information includes, among other things,
the following: (i) Trade date and time; (ii) symbol information;
(iii) trade price/size information; (iv) Member type (for example,
and without limitation, Market Maker, Electronic Exchange Member,
Broker-Dealer); (v) Exchange Member Participant Identifier
(``MPID'') for each side of the transaction, including Clearing
Member MPID; and (vi) strategy specific information for complex
transactions. CTD Port Fees will be assessed in any month the Member
is credentialed to use the CTD Port in the production environment.
See Fee Schedule, Section (5)(d)(iii).
\14\ The FIX Drop Copy Port (``FXD'') is a messaging interface
that will provide a copy of real-time trade execution, trade
correction and trade cancellation information for simple and complex
orders to FIX Drop Copy Port users who subscribe to the service. FIX
Drop Copy Port users are those users who are designated by an EEM to
receive the information and the information is restricted for use by
the EEM only. FXD Port Fees will be assessed in any month the Member
is credentialed to use the FXD Port in the production environment.
See Fee Schedule, Section (5)(d)(iv).
---------------------------------------------------------------------------
API Testing and Certification fees for Market Makers are assessed
(i) initially per API for CTD and MEI ports in the month the Market
Maker has been credentialed to use one or more ports in the production
environment for the tested API and the Market Maker has been assigned
to quote in one or more classes, and (ii) each time a Market Maker
initiates a change to its system that requires testing and
certification. API Testing and Certification fees will not be assessed
in situations where the Exchange initiates a mandatory change to the
Exchange's system that requires testing and certification. The Exchange
currently assesses a Market Maker an API Testing and Certification fee
of $2,500. The API Testing and Certification fees represent costs
incurred by the Exchange as it works with each Member for testing and
certifying that the Member's software systems communicate properly with
MIAX's interfaces.
MIAX proposes to extend the waiver of the API Testing and
Certification fee for Market Makers that trade solely in Proprietary
Products (including options on SPIKES) from December 31, 2021, until
June 30, 2022, which the Exchange proposes to state in the Fee
Schedule. The purpose of this proposed change is to continue to provide
an incentive for potential Market Makers to develop software
applications to trade in Proprietary Products, including options on
SPIKES. Even though the Exchange proposes to extend the waiver of this
particular fee, the overall structure of the fee is outlined in the Fee
Schedule so that there is general awareness that the Exchange intends
to assess such a fee after June 30, 2022.
MEI Port Fees
MIAX assesses monthly MEI Port fees to Market Makers in each month
the Member has been credentialed to use the MEI Port in the production
environment and has been assigned to quote in at least one class. The
amount of the monthly MEI Port fee is based upon the number of classes
in which the Market Maker was assigned to quote on any given day within
the calendar month, and upon the class volume percentages set forth in
the table below. The class volume percentage is based on the total
national average daily volume in classes listed on MIAX in the prior
calendar quarter. Newly listed option
[[Page 520]]
classes are excluded from the calculation of the monthly MEI Port fee
until the calendar quarter following their listing, at which time the
newly listed option classes will be included in both the per class
count and the percentage of total national average daily volume. The
Exchange assesses MIAX Market Makers the monthly MEI Port fee based on
the greatest number of classes listed on MIAX that the MIAX Market
Maker was assigned to quote in on any given day within a calendar month
and the applicable fee rate that is the lesser of either the per class
basis or percentage of total national average daily volume measurement.
MIAX assesses MEI Port fees on Market Makers according to the following
table: \15\
---------------------------------------------------------------------------
\15\ See Fee Schedule (5)(d)(ii).
------------------------------------------------------------------------
Market Maker assignments (the lesser of
the applicable measurements below) [Omega]
Monthly MIAX MEI fees -------------------------------------------
% of National
Per class average daily volume
------------------------------------------------------------------------
$5,000.00................... Up to 5 Classes..... Up to 10% of Classes
by volume.
$10,000.00.................. Up to 10 Classes.... Up to 20% of Classes
by volume.
$14,000.00.................. Up to 40 Classes.... Up to 35% of Classes
by volume.
$17,500.00 *................ Up to 100 Classes... Up to 50% of Classes
by volume.
$20,500.00 *................ Over 100 Classes.... Over 50% of Classes
by volume up to all
Classes listed on
MIAX.
------------------------------------------------------------------------
[Omega] Excludes Proprietary Products.
* For these Monthly MIAX MEI Fees levels, if the Market Maker's total
monthly executed volume during the relevant month is less than 0.060%
of the total monthly executed volume reported by OCC in the market
maker account type for MIAX-listed option classes for that month, then
the fee will be $14,500 instead of the fee otherwise applicable to
such level.
MIAX proposes to extend the waiver of the monthly MEI Port fee for
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) from December 31, 2021, until June 30, 2022, which
the Exchange proposes to state in the Fee Schedule. The purpose of this
proposal is to continue to provide an incentive to Market Makers to
connect to MIAX through the MEI Port such that they will be able to
trade in MIAX Proprietary Products. Even though the Exchange proposes
to extend the waiver of this particular fee, the overall structure of
the fee is outlined in the Fee Schedule so that there is general
awareness that the Exchange intends to assess such a fee after June 30,
2022.
The Exchange notes that for the purposes of this proposed change,
other Market Makers who trade MIAX Proprietary Products (including
options on SPIKES) along with multi-listed classes will continue to not
have Proprietary Products (including SPIKES) counted toward those
Market Makers' class assignment count or percentage of total national
average daily volume. This exclusion is noted by the symbol ``[Omega]''
following the table that shows the monthly MEI Port Fees currently
assessed for Market Makers in Section (5)(d)(ii) of the Fee Schedule.
The proposed extension of the fee waivers are targeted at market
participants, particularly market makers, who are not currently members
of MIAX, who may be interested in being a Market Maker in Proprietary
Products on the Exchange. The Exchange estimates that there are fewer
than ten (10) such market participants that could benefit from the
extension of these fee waivers. The proposed extension of the fee
waivers does not apply differently to different sizes of market
participants, however the fee waivers do only apply to Market Makers
(and not EEMs).
Market Makers, unlike other market participants, take on a number
of obligations, including quoting obligations that other market
participants do not have. Further, Market Makers have added market
making and regulatory requirements, which normally do not apply to
other market participants. For example, Market Makers have obligations
to maintain continuous markets, engage in a course of dealings
reasonably calculated to contribute to the maintenance of a fair and
orderly market, and to not make bids or offers or enter into
transactions that are inconsistent with a course of dealing.
Accordingly, the Exchange believes it is reasonable and not unfairly
discriminatory to continue to offer the fee waivers to Market Makers
because the Exchange is seeking additional liquidity providers for
Proprietary Products, in order to enhance liquidity and spreads in
Proprietary Products, which is traditionally provided by Market Makers,
as opposed to EEMs.
Incentive Program Extension
On September 30, 2021, the Exchange filed its initial proposal to
implement a SPIKES Options Market Maker Incentive Program for SPIKES
options to incentivize Market Makers to improve liquidity, available
volume, and the quote spread width of SPIKES options beginning October
1, 2021, and ending December 31, 2021.\16\ Technical details regarding
the Incentive Program were published in a Regulatory Circular on
September 30, 2021.\17\ On October 12, 2021, the Exchange withdrew SR-
MIAX-2021-45 and refiled its proposal to implement the Incentive
Program to provide additional details.\18\ In that filing, the Exchange
specifically noted that the Incentive Program would expire at the end
of the period (December 31, 2021) unless the Exchange filed another
19b-4 Filing to amend the fees (or extend the Incentive Program).\19\
The Exchange now proposes to extend the Incentive Program for three
months, with the Incentive Program ending on March 31, 2022.\20\
---------------------------------------------------------------------------
\16\ See SR-MIAX-2021-45.
\17\ See MIAX Options Regulatory Circular 2021-56, SPIKES
Options Market Maker Incentive Program (September 30, 2021)
available at https://www.miaxoptions.com/sites/default/files/circularfiles/MIAX_Options_RC_2021_56.pdf.
\18\ See Securities Exchange Act Release No. 93424 (October 26,
2021), 86 FR 60322 (November 1, 2021) (SR-MIAX-2021-49).
\19\ See id., at note 4.
\20\ The Exchange notes that at the end of the extension period,
the Incentive Program will expire unless the Exchange files another
19b-4 Filing to amend the terms or extend the Incentive Program.
---------------------------------------------------------------------------
The Exchange proposes to extend the Incentive Program for SPIKES
options to continue to incentivize Market Makers to improve liquidity,
available volume, and the quote spread width of SPIKES options.
Currently, to be eligible to participate in the Incentive Program, a
Market Maker must meet certain minimum requirements related to quote
spread width in certain in-the-money (ITM) and out-of-the-money (OTM)
options as determined by the Exchange and communicated to Members via
[[Page 521]]
Regulatory Circular.\21\ Market Makers must also satisfy a minimum time
in the market in the front 2 expiry months of 70%, and have an average
quote size of 25 contracts. The Exchange established two separate
incentive compensation pools that are used to compensate Market Makers
that satisfy the criteria pursuant to the Incentive Program.
---------------------------------------------------------------------------
\21\ See supra note 17.
---------------------------------------------------------------------------
The first pool (Incentive 1) has a total amount of $40,000 per
month, which is allocated to Market Makers that meet the minimum
requirements of the Incentive Program. Market Makers are required to
meet minimum spread width requirements in a select number of ITM and
OTM SPIKES option contracts as determined by the Exchange and
communicated to Members via Regulatory Circular.\22\ A complete
description of how the Exchange calculates the minimum spread width
requirements in ITM and OTM SPIKES options can be found in the
published Regulatory Circular.\23\ Market Makers are also required to
maintain the minimum spread width, described above, for at least 70% of
the time in the front two (2) SPIKES options contract expiry months and
maintain an average quote size of at least 25 SPIKES options contracts.
The amount available to each individual Market Maker is capped at
$10,000 per month for satisfying the minimum requirements of the
Incentive Program. In the event that more than four Market Makers meet
the requirements of the Incentive Program, each qualifying Market Maker
is entitled to receive a pro-rated share of the $40,000 monthly
compensation pool dependent upon the number of qualifying Market Makers
in that particular month.
---------------------------------------------------------------------------
\22\ See id.
\23\ See id.
---------------------------------------------------------------------------
The second pool (Incentive 2 Pool) is capped at a total amount of
$100,000 per month which is used during the Incentive Program to
further incentivize Market Makers who meet or exceed the requirements
of Incentive 1 (``qualifying Market Makers'') to provide tighter quote
width spreads. The Exchange ranks each qualifying Market Maker's quote
width spread relative to each other qualifying Market Maker's quote
width spread. Market Makers with tighter spreads in certain strikes, as
determined by the Exchange and communicated to Members via Regulatory
Circular,\24\ are eligible to receive a pro-rated share of the
compensation pool as calculated by the Exchange and communicated to
Members via Regulatory Circular,\25\ not to exceed $25,000 per Member
per month. Qualifying Market Makers are ranked relative to each other
based on the quality of their spread width (i.e., tighter spreads are
ranked higher than wider spreads) and the Market Maker with the best
quality spread width receives the highest rebate, while other eligible
qualifying Market Makers receive a rebate relative to their quality
spread width.
---------------------------------------------------------------------------
\24\ See id.
\25\ See id.
---------------------------------------------------------------------------
The Exchange now proposes to extend the Incentive Program until
March 31, 2022. The Exchange does not propose to make any amendments to
how it calculates any of the incentives provided for in Incentive Pools
1 or 2. The details of the Incentive Program can continue to be found
in the Regulatory Circular that was published on September 30, 2021 to
all Exchange Members.\26\ The purpose of this extension is to continue
to incentivize Market Makers to improve liquidity, available volume,
and the quote spread width of SPIKES options. The Exchange will
announce the extension of the Incentive Program to all Members via a
Regulatory Circular.
---------------------------------------------------------------------------
\26\ See id.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \27\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \28\ in
particular, in that it is an equitable allocation of reasonable 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, 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
customers, issuers, brokers and dealers.
---------------------------------------------------------------------------
\27\ 15 U.S.C. 78f(b).
\28\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that the proposal to extend the fee waiver
period for certain non-transaction fees for Market Makers in
Proprietary Products is an equitable allocation of reasonable fees
because the proposal continues to waive non-transaction fees for a
limited period of time in order to enable the Exchange to improve its
overall competitiveness and strengthen its market quality for all
market participants in MIAX's Proprietary Products, including options
on SPIKES. The Exchange believe the proposed extension of the fee
waivers is fair and equitable and not unreasonably discriminatory
because it applies to all market participants not currently registered
as Market Makers at the Exchange. Any market participant may choose to
satisfy the additional requirements and obligations of being a Market
Maker and trade solely in Proprietary Products in order to qualify for
the fee waivers.
The Exchange believes that the proposed extension of the fee
waivers is equitable and not unfairly discriminatory for Market Makers
as compared to EEMs because Market Makers, unlike other market
participants, take on a number of obligations, including quoting
obligations that other market participants do not have. Further, Market
Makers have added market making and regulatory requirements, which
normally do not apply to other market participants. For example, Market
Makers have obligations to maintain continuous markets, engage in a
course of dealings reasonably calculated to contribute to the
maintenance of a fair and orderly market, and to not make bids or
offers or enter into transactions that are inconsistent with a course
of dealing.
The Exchange believes it is reasonable and equitable to continue to
waive the one-time Membership Application Fee, monthly Trading Permit
Fee, API Testing and Certification Fee, and monthly MEI Port Fee for
Market Makers that trade solely in Proprietary Products (including
options on SPIKES) until June 30, 2022, since the waiver of such fees
provides incentives to interested market participants to trade in
Proprietary Products. This should result in increasing potential order
flow and liquidity in MIAX Proprietary Products, including options on
SPIKES.
The Exchange believes it is reasonable and equitable to continue to
waive the API Testing and Certification fee assessable to Market Makers
that trade solely in Proprietary Products (including options on SPIKES)
until June 30, 2022, since the waiver of such fees provides incentives
to interested Members to develop and test their APIs sooner.
Determining system operability with the Exchange's system will in turn
provide MIAX with potential order flow and liquidity providers in
Proprietary Products.
The Exchange believes it is reasonable, equitable and not unfairly
discriminatory that Market Makers who trade in Proprietary Products
along with
[[Page 522]]
multi-listed classes will continue to not have Proprietary Products
counted toward those Market Makers' class assignment count or
percentage of total national average daily volume for monthly Trading
Permit Fees and monthly MEI Port Fees in order to incentivize existing
Market Makers who currently trade in multi-listed classes to also trade
in Proprietary Products, without incurring certain additional fees.
The Exchange believes that the proposed extension of the fee
waivers constitutes an equitable allocation of reasonable fees and
other charges among its members and issuers and other persons using its
facilities. The proposed extension of the fee waivers means that all
prospective market makers that wish to become Market Maker Members of
the Exchange and quote solely in Proprietary Products may do so and
have the above-mentioned fees waived until June 30, 2022. The proposed
extension of the fee waivers will continue to not apply to potential
EEMs because the Exchange is seeking to enhance the quality of its
markets in Proprietary Products through introducing more competition
among Market Makers in Proprietary Products. In order to increase the
competition, the Exchange believes that it must continue to waive entry
type fees for such Market Makers. EEMs do not provide the benefit of
enhanced liquidity which is provided by Market Makers, therefore the
Exchange believes it is reasonable and not unfairly discriminatory to
continue to only offer the proposed fee waivers to Market Makers (and
not EEMs). Further, the Exchange believes it is reasonable and not
unfairly discriminatory to continue to exclude Proprietary Products
from an existing Market Maker's permit fees and port fees, in order to
incentive such Market Makers to quote in Proprietary Products. The
amount of a Market Maker's permit and port fee is determined by the
number of classes quoted and volume of the Market Maker. By excluding
Proprietary Products from such fees, the Exchange is able to
incentivize Market Makers to quote in Proprietary Products. EEMs do not
pay permit and port fees based on the classes traded or volume, so the
Exchange believes it is reasonable, equitable, and not unfairly
discriminatory to only offer the exclusion to Market Makers (and not
EEMs).
The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to extend the Incentive Program for Market
Makers in SPIKES options. The Incentive Program is reasonably designed
because it will continue to incentivize Market Makers to provide quotes
and increased liquidity in select SPIKES options contracts. The
Incentive Program is reasonable, equitably allocated and not unfairly
discriminatory because all Market Makers in SPIKES options may continue
to qualify for Incentive 1 and Incentive 2, dependent upon each Market
Maker's quoting in SPIKES options in a particular month. Additionally,
if a SPIKES Market Maker does not satisfy the requirements of Incentive
Pool 1 or 2, then it simply will not receive the rebate offered by the
Incentive Program for that month.
The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to continue to offer this financial incentive
to SPIKES Market Makers because it will continue to benefit all market
participants trading in SPIKES. SPIKES Options is a Proprietary Product
on the Exchange and the continuation of the Incentive Program
encourages SPIKES Market Makers to satisfy a heightened quoting
standard, average quote size, and time in market. A continued increase
in quoting activity and tighter quotes may yield a corresponding
increase in order flow from other market participants, which benefits
all investors by deepening the Exchange's liquidity pool, potentially
providing greater execution incentives and opportunities, while
promoting market transparency and improving investor protection.
The Exchange believes that the Incentive Program is equitable and
not unfairly discriminatory because it will continue to promote an
increase in SPIKES options liquidity, which may facilitate tighter
spreads and an increase in trading opportunities to the benefit of all
market participants. The Exchange believes it is reasonable to operate
the Incentive Program for a continued limited period of time to
strengthen market quality for all market participants. The resulting
increased volume and liquidity will benefit those Members who are
eligible to participate in the Incentive Program and will also continue
to benefit those Members who are not eligible to participate in the
Incentive Program by providing more trading opportunities and tighter
spreads.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
Intra-Market Competition
The Exchange believes that the proposal to extend certain of the
non-transaction fee waivers until June 30, 2022 for Market Makers that
trade solely in Proprietary Products would increase intra-market
competition by incentivizing new potential Market Makers to quote in
Proprietary Products, which will enhance the quality of quoting and
increase the volume of contracts in Proprietary Products traded on
MIAX, including options on SPIKES. To the extent that this purpose is
achieved, all the Exchange's market participants should benefit from
the improved market liquidity for the Exchange's Proprietary Products.
Enhanced market quality and increased transaction volume in Proprietary
Products that results from the anticipated increase in Market Maker
activity on the Exchange will benefit all market participants and
improve competition on the Exchange.
The Exchange does not believe that the proposed rule change will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed changes for each separate type of market participant (new
Market Makers and existing Market Makers) will be assessed equally to
all such market participants. While different fees are assessed to
different market participants in some circumstances, these different
market participants have different obligations and different
circumstances as discussed above. For example, Market Makers have
quoting obligations that other market participants (such as EEMs) do
not have.
The Exchange believes that the proposed extension of the Incentive
Program would continue to increase intra-market competition by
incentivizing Market Makers to quote SPIKES options, which will
continue to enhance the quality of quoting and increase the volume of
contracts available to trade in SPIKES options. To the extent that this
purpose is achieved, all the Exchange's market participants should
benefit from the improved market liquidity for SPIKES options. Enhanced
market quality and increased transaction volume in SPIKES options that
results from the anticipated increase in Market Maker activity on the
Exchange will benefit all market participants and improve competition
on the Exchange.
Inter-Market Competition
The Exchange does not believe that the proposed rule changes will
impose
[[Page 523]]
any burden on inter-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the
proposed extension of the fee waivers and the extension of the
Incentive Program apply only to the Exchange's Proprietary Products
(including options on SPIKES), which are traded exclusively on 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,\29\ and Rule 19b-4(f)(2) \30\ 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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\29\ 15 U.S.C. 78s(b)(3)(A)(ii).
\30\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MIAX-2021-63 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-2021-63. 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-2021-63, and should be
submitted on or before January 26, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2021-28576 Filed 1-4-22; 8:45 am]
BILLING CODE 8011-01-P
