Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule at Options 7, Section 4 (Complex Order Fees), 10611-10614 [2023-03484]
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Federal Register / Vol. 88, No. 34 / Tuesday, February 21, 2023 / Notices
believes that attracting more liquidity
from Priority Customer orders will
benefit all market participants that trade
on ISE.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
lotter on DSK11XQN23PROD with NOTICES1
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. In terms of
inter-market competition, the Exchange
notes that it operates in a highly
competitive market in which market
participants can readily favor competing
venues if they deem fee levels at a
particular venue to be excessive, or
rebate opportunities available at other
venues to be more favorable. In such an
environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges and
with alternative trading systems that
have been exempted from compliance
with the statutory standards applicable
to exchanges. Because competitors are
free to modify their own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
In sum, if the changes proposed
herein are unattractive to market
participants, it is likely that the
Exchange will lose market share as a
result. Accordingly, the Exchange does
not believe that the proposed changes
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
In terms of intra-market competition,
the Exchange’s proposal to increase the
PIM break-up rebate for Priority
Customer orders in Select Symbols does
not impose an undue burden on
competition because Priority Customer
liquidity benefits all market participants
on ISE by providing more trading
opportunities, which in turn attracts
market makers. As discussed above, an
increase in the activity of these market
participants in turn facilitates tighter
spread, which may cause an additional
corresponding increase in order flow
from other market participants.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
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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.15 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: (i)
necessary or appropriate in the public
interest; (ii) for the protection of
investors; or (iii) 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:
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–
ISE–2023–04 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–ISE–2023–04. 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 such
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–ISE–2023–04 and should be
submitted on or before March 14, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–03486 Filed 2–17–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96925; File No. SR–MRX–
2023–03]
Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Pricing
Schedule at Options 7, Section 4
(Complex Order Fees)
February 14, 2023.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on January
30, 2023, Nasdaq MRX, LLC (‘‘MRX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to a proposal
to amend the Exchange’s Pricing
Schedule at Options 7, Section 4
(Complex Order Fees).
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/mrx/rules, at the principal
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
15 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
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Federal Register / Vol. 88, No. 34 / Tuesday, February 21, 2023 / Notices
office of the Exchange, and at the
Commission’s Public Reference Room.
the most significant aspects of such
statements.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
1. Purpose
The purpose of the proposed rule
change is to amend the Exchange’s
Pricing Schedule at Options 7, Section
4 (Complex Order Fees).3
As set forth in Options 7, Section 4,
the Exchange presently assesses all
market participants except Priority
Customers 4 a uniform $0.15 per
contract fee for all complex order
transactions in all symbols.5 Priority
Customers are presently assessed no
fees for complex order transactions. In
addition, the Exchange currently
reduces this $0.15 per contract fee to
$0.00 for Market Makers 6 when a
Market Maker trades against Priority
Customer orders that originate from an
Affiliated Member 7 or Affiliated
Entity.8 This incentive is designed to
encourage Market Makers, Affiliated
Members, and/or Affiliated Entities to
direct additional Priority Customer
order flow to the Exchange.
The Exchange now proposes to
differentiate complex order pricing
between Penny and Non-Penny Symbols
as follows:
Capacity of market participant
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Market Maker ...........................................................................................................................................................
Non-Nasdaq MRX Market Maker (FarMM) .............................................................................................................
Firm Proprietary/Broker-Dealer ................................................................................................................................
Professional Customer ............................................................................................................................................
Priority Customer .....................................................................................................................................................
$0.00 per contract applies instead of the
above-referenced complex order fee in
Penny and Non-Penny Symbols, when
the Market Maker trades against Priority
Customer orders that originate from an
Affiliated Member or an Affiliated
Entity.
With the proposed changes, the
complex order fee for all non-Priority
Customers will increase from $0.15 to
$0.35 per contract in Penny Symbols. In
Non-Penny Symbols, this fee will
increase from $0.15 to $0.85 per
contract for all non-Priority Customers.
Priority Customers will continue to
receive free executions in all symbols
under this proposal.
In addition, the Exchange will
continue to provide Market Makers with
the reduced fee described above for
their complex orders in both Penny and
Non-Penny Symbols when the Market
Maker trades against Priority Customer
orders that originate from an Affiliated
Member or Affiliated Entity.
Accordingly, the Exchange proposes to
clarify note 2 in Options 7, Section 4 to
reflect the proposed changes. In
particular, note 2 will provide that a
complex order Market Maker fee of
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,9 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,10 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange’s proposed changes to
its schedule of credits are reasonable in
3 The Exchange initially filed the proposed
pricing changes on January 3, 2023 (SR–MRX–
2023–01) to adopt a Market Maker growth incentive
and to amend complex order fees. On January 17,
2023, the Exchange withdrew that filing and
submitted SR–MRX–2023–02. On January 30, 2023,
the Exchange withdrew that filing and submitted
separate filings for the Market Maker growth
incentive and complex order fees. This specific
filing replaces the complex order fees set forth in
SR–MRX–2023–02.
4 A ‘‘Priority Customer’’ is a person or entity that
is not a broker/dealer in securities, and does not
place more than 390 orders in listed options per day
on average during a calendar month for its own
beneficial account(s), as defined in Nasdaq MRX
Options 1, Section 1(a)(36).
5 With the exception of complex PIM orders,
which are subject to separate pricing in Options 7,
Section 3.A.
6 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See Options 1, Section
1(a)(21).
7 An ‘‘Affiliated Member’’ is a Member that shares
at least 75% common ownership with a particular
Member as reflected on the Member’s Form BD,
Schedule A.
8 An ‘‘Affiliated Entity’’ is a relationship between
an Appointed Market Maker and an Appointed OFP
for purposes of qualifying for certain pricing
specified in the Pricing Schedule. Market Makers
and OFPs are required to send an email to the
Exchange to appoint their counterpart, at least 3
business days prior to the last day of the month to
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2. Statutory Basis
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Fee per
contract—
penny symbols
Fee per
contract—nonpenny symbols
$0.35
0.35
0.35
0.35
0.00
$0.85
0.85
0.85
0.85
0.00
several respects. As a threshold matter,
the Exchange is subject to significant
competitive forces in the market for
options securities transaction services
that constrain its pricing determinations
in that market. The fact that this market
is competitive has long been recognized
by the courts. In NetCoalition v.
Securities and Exchange Commission,
the D.C. Circuit stated as follows: ‘‘[n]o
one disputes that competition for order
flow is ‘fierce.’ . . . As the SEC
explained, ‘[i]n the U.S. national market
system, buyers and sellers of securities,
and the broker-dealers that act as their
order-routing agents, have a wide range
of choices of where to route orders for
execution’; [and] ‘no exchange can
afford to take its market share
percentages for granted’ because ‘no
exchange possesses a monopoly,
regulatory or otherwise, in the execution
qualify for the next month. The Exchange will
acknowledge receipt of the emails and specify the
date the Affiliated Entity is eligible for applicable
pricing, as specified in the Pricing Schedule. Each
Affiliated Entity relationship will commence on the
1st of a month and may not be terminated prior to
the end of any month. An Affiliated Entity
relationship will automatically renew each month
until or unless either party terminates earlier in
writing by sending an email to the Exchange at least
3 business days prior to the last day of the month
to terminate for the next month. Affiliated Members
may not qualify as a counterparty comprising an
Affiliated Entity. Each Member may qualify for only
one (1) Affiliated Entity relationship at any given
time.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
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Federal Register / Vol. 88, No. 34 / Tuesday, February 21, 2023 / Notices
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of order flow from broker
dealers’. . . .’’ 11
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 12
Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for options
security transaction services. The
Exchange is only one of sixteen options
exchanges to which market participants
may direct their order flow. Within this
environment, market participants can
freely and often do shift their order flow
among the Exchange and competing
venues in response to changes in their
respective pricing schedules. As such,
the proposal represents a reasonable
attempt by the Exchange to increase its
liquidity and market share relative to its
competitors.
The Exchange believes that the
proposed changes to its complex order
fee schedule in Options 7, Section 4 are
reasonable. As discussed above, the
proposed complex order fee for all nonPriority Customers will increase from
$0.15 to $0.35 per contract in Penny
Symbols. In Non-Penny Symbols, this
fee will increase from $0.15 to $0.85 per
contract for all non-Priority Customers.
Priority Customers will continue to
receive free executions in all symbols
under this proposal. While the nonPriority Customer complex fees are
increasing across the board for all
symbols, the Exchange believes that the
proposing pricing will remain
competitive and in line with other
options exchanges that charge complex
order fees.13 When the Exchange first
11 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca–2006–21)).
12 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
13 For example, MIAX Emerald charges complex
order fees in Penny Classes that range from $0.10
to $0.50 per contract for all origin types except
Priority Customers, depending on whether the
market participant is a maker or taker. In NonPenny Classes, those fees range from $0.20 to $0.88
per contract for all origin types except Priority
Customer, depending on whether the market
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17:54 Feb 17, 2023
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adopted complex functionality and
related fees back in 2019, it initially set
non-Priority Customer complex fees at
$0.15 per contract (i.e., the current
rate).14 The Exchange adopted this
initial pricing structure (which was
lower than certain options exchanges
that had comparable complex pricing) to
enable it to effectively compete with
other exchanges by attracting complex
order flow to the Exchange, thereby
helping the Exchange to gain market
share for complex executions. After
more than three years, the Exchange
now believes that it is appropriate and
reasonable to adjust these fees in order
to bring them in line with complex fees
charged at other options exchanges.
Furthermore, the Exchange believes
that the proposed fee structure for nonPriority Customer complex orders is
equitable and not unfairly
discriminatory because it will apply
uniformly to all similarly situated
participants. The Exchange believes that
it is equitable and not unfairly
discriminatory to continue to offer
Priority Customers free executions in
complex orders in all symbols. Priority
Customer liquidity benefits all market
participants by providing more trading
opportunities, which attracts Market
Makers. An increase in the activity of
these market participants in turn
facilitates tighter spreads, which may
cause an additional corresponding
increase in order flow from other market
participants.
Lastly, the Exchange believes that the
proposed changes to note 2 in Options
7, Section 4 are reasonable, equitable,
and not unfairly discriminatory because
these are clarifying changes to reflect
that the Exchange will continue to
provide Market Makers with the
reduced fee described above for their
complex orders in all symbols when the
Market Maker trades against Priority
Customer orders that originate from an
Affiliated Member or Affiliated Entity.
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.
In terms of intra-market competition,
the Exchange does not believe that its
proposals will place any category of
participant is a maker or taker. See MIAX Emerald
Fee Schedule, Section 1)a)i) at https://
www.miaxoptions.com/sites/default/files/fee_
schedule-files/MIAX_Emerald_Fee_Schedule_1_9_
2023.pdf.
14 See Securities Exchange Act Release No. 86326
(July 8, 2019), 84 FR 33300 (July 12, 2019) (SR–
MRX–2019–14).
PO 00000
Frm 00119
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10613
market participant at a competitive
disadvantage. As noted above, the
proposed changes will apply uniformly
to all similarly situated market
participants.
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
options exchanges. Because competitors
are free to modify their own fees in
response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. As discussed above for the
proposed non-Priority Customer
complex fee structure, the Exchange
notes that its proposal will bring this
pricing in line with other options
exchanges that offer similar complex
functionality.15
In sum, if the changes proposed
herein are unattractive to market
participants, it is likely that the
Exchange will lose market share as a
result. Accordingly, the Exchange does
not believe that the proposed changes
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or 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.16 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: (i)
necessary or appropriate in the public
interest; (ii) for the protection of
investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
15 See
16 15
E:\FR\FM\21FEN1.SGM
supra note 13.
U.S.C. 78s(b)(3)(A)(ii).
21FEN1
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Federal Register / Vol. 88, No. 34 / Tuesday, February 21, 2023 / Notices
to determine whether the proposed rule
should be approved or disapproved.
be submitted on or before March 14,
2023.
IV. Solicitation of Comments
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Sherry R. Haywood,
Assistant Secretary.
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
Paper Comments
lotter on DSK11XQN23PROD with NOTICES1
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
• 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–
MRX–2023–03 on the subject line.
• 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–MRX–2023–03. 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–MRX–2023–03 and should
17 17
[FR Doc. 2023–03484 Filed 2–17–23; 8:45 am]
[Docket No: SSA–2023–0004]
Agency Information Collection
Activities: Proposed Request and
Comment Request
The Social Security Administration
(SSA) publishes a list of information
collection packages requiring clearance
by the Office of Management and
Budget (OMB) in compliance with
Public Law 104–13, the Paperwork
Reduction Act of 1995, effective October
1, 1995. This notice includes revisions
of OMB-approved information
collections.
SSA is soliciting comments on the
accuracy of the agency’s burden
estimate; the need for the information;
its practical utility; ways to enhance its
quality, utility, and clarity; and ways to
minimize burden on respondents,
including the use of automated
collection techniques or other forms of
information technology. Mail, email, or
fax your comments and
recommendations on the information
collection(s) to the OMB Desk Officer
and SSA Reports Clearance Officer at
the following addresses or fax numbers.
(OMB) Office of Management and
Budget, Attn: Desk Officer for SSA,
Comments: https://www.reginfo.gov/
public/do/PRAMain. Submit your
comments online referencing Docket ID
Number [SSA–2023–0004].
(SSA) Social Security Administration,
OLCA, Attn: Reports Clearance Director,
3100 West High Rise, 6401 Security
Blvd., Baltimore, MD 21235, Fax: 833–
410–1631, Email address:
OR.Reports.Clearance@ssa.gov. Or you
may submit your comments online
through https://www.reginfo.gov/public/
do/PRAMain, referencing Docket ID
Number [SSA–2023–0004].
I. The information collection below is
pending at SSA. SSA will submit it to
OMB within 60 days from the date of
this notice. To be sure we consider your
comments, we must receive them no
later than April 24, 2023. Individuals
can obtain copies of the collection
instrument by writing to the above
email address.
Evidence From Excluded Medical
Sources of Evidence—20 CFR 404.1503b
and 416.903b—0960–0803. Section 812
of the Bipartisan Budget Act of 2015
(BBA), ‘‘Exclusion of certain medical
sources of evidence,’’ mandates that the
Social Security Administration (SSA)
exclude evidence in disability decisions
from certain medical sources. BBA
Section 812 amended section 223(d)(5)
of the Social Security Act (Act) by
adding a subsection ‘‘C.’’ Section
223(d)(5)(C)(i) of the Act, as amended,
requires SSA to exclude evidence
(except for good cause) from medical
sources: (1) convicted of a felony under
sections 208 or 1632 of the Act; (2)
excluded from participating in any
Federal health care program under
section 1128 of the Act; or (3) imposed
with a civil monetary penalty (CMP),
assessment, or both, for submitting false
evidence, under section 1129 of the Act.
We also implemented section
223(d)(5)(C), as amended, through
regulations at 20 CFR 404.1503b and
416.903b of the Code of Federal
Regulations. These regulations require
excluded medical sources to self-report
their excluded status, in writing, each
time they submit evidence related to a
claim for benefits under Titles II or XVI
of the Act. Excluded medical sources’
duty to self-report their excluded status
applies to evidence they submit to SSA
directly, or through a representative,
claimant, or other individual or entity.
As needed, SSA informs the medical
sources we suspect should be excluded
of these requirements through a Fact
Sheet we send to them via mail, or
which they can find on our website
where we list the regulatory
requirements under BBA section 812. In
addition, along with the Fact Sheet and
website, we provide sample statements
as templates the affected medical
sources can use to create their own
written statements as required under
our regulations. The respondents for
this collection are medical sources that:
(1) meet one of the exclusionary
categories set forth in section
223(d)(5)(C)(i) of the Act, as amended;
(2) furnish evidence related to a claim
for benefits under Titles II or XVI of the
Act; and (3) had failed to self-identify as
an excluded source of medical evidence
as required in section 223(d(5)(C)(i).
Type of Request: Revision of an OMBapproved information collection.
CFR 200.30–3(a)(12).
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]]>Agencies
[Federal Register Volume 88, Number 34 (Tuesday, February 21, 2023)]
[Notices]
[Pages 10611-10614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-03484]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96925; File No. SR-MRX-2023-03]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Pricing Schedule at Options 7, Section 4 (Complex Order Fees)
February 14, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 30, 2023, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III, below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to a proposal to amend the Exchange's Pricing
Schedule at Options 7, Section 4 (Complex Order Fees).
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the
principal
[[Page 10612]]
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Exchange's
Pricing Schedule at Options 7, Section 4 (Complex Order Fees).\3\
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\3\ The Exchange initially filed the proposed pricing changes on
January 3, 2023 (SR-MRX-2023-01) to adopt a Market Maker growth
incentive and to amend complex order fees. On January 17, 2023, the
Exchange withdrew that filing and submitted SR-MRX-2023-02. On
January 30, 2023, the Exchange withdrew that filing and submitted
separate filings for the Market Maker growth incentive and complex
order fees. This specific filing replaces the complex order fees set
forth in SR-MRX-2023-02.
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As set forth in Options 7, Section 4, the Exchange presently
assesses all market participants except Priority Customers \4\ a
uniform $0.15 per contract fee for all complex order transactions in
all symbols.\5\ Priority Customers are presently assessed no fees for
complex order transactions. In addition, the Exchange currently reduces
this $0.15 per contract fee to $0.00 for Market Makers \6\ when a
Market Maker trades against Priority Customer orders that originate
from an Affiliated Member \7\ or Affiliated Entity.\8\ This incentive
is designed to encourage Market Makers, Affiliated Members, and/or
Affiliated Entities to direct additional Priority Customer order flow
to the Exchange.
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\4\ A ``Priority Customer'' is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s), as defined in Nasdaq MRX Options 1,
Section 1(a)(36).
\5\ With the exception of complex PIM orders, which are subject
to separate pricing in Options 7, Section 3.A.
\6\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1,
Section 1(a)(21).
\7\ An ``Affiliated Member'' is a Member that shares at least
75% common ownership with a particular Member as reflected on the
Member's Form BD, Schedule A.
\8\ An ``Affiliated Entity'' is a relationship between an
Appointed Market Maker and an Appointed OFP for purposes of
qualifying for certain pricing specified in the Pricing Schedule.
Market Makers and OFPs are required to send an email to the Exchange
to appoint their counterpart, at least 3 business days prior to the
last day of the month to qualify for the next month. The Exchange
will acknowledge receipt of the emails and specify the date the
Affiliated Entity is eligible for applicable pricing, as specified
in the Pricing Schedule. Each Affiliated Entity relationship will
commence on the 1st of a month and may not be terminated prior to
the end of any month. An Affiliated Entity relationship will
automatically renew each month until or unless either party
terminates earlier in writing by sending an email to the Exchange at
least 3 business days prior to the last day of the month to
terminate for the next month. Affiliated Members may not qualify as
a counterparty comprising an Affiliated Entity. Each Member may
qualify for only one (1) Affiliated Entity relationship at any given
time.
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The Exchange now proposes to differentiate complex order pricing
between Penny and Non-Penny Symbols as follows:
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Fee per Fee per
Capacity of market participant contract--penny contract--non-
symbols penny symbols
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Market Maker........................... $0.35 $0.85
Non-Nasdaq MRX Market Maker (FarMM).... 0.35 0.85
Firm Proprietary/Broker-Dealer......... 0.35 0.85
Professional Customer.................. 0.35 0.85
Priority Customer...................... 0.00 0.00
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With the proposed changes, the complex order fee for all non-
Priority Customers will increase from $0.15 to $0.35 per contract in
Penny Symbols. In Non-Penny Symbols, this fee will increase from $0.15
to $0.85 per contract for all non-Priority Customers. Priority
Customers will continue to receive free executions in all symbols under
this proposal.
In addition, the Exchange will continue to provide Market Makers
with the reduced fee described above for their complex orders in both
Penny and Non-Penny Symbols when the Market Maker trades against
Priority Customer orders that originate from an Affiliated Member or
Affiliated Entity. Accordingly, the Exchange proposes to clarify note 2
in Options 7, Section 4 to reflect the proposed changes. In particular,
note 2 will provide that a complex order Market Maker fee of $0.00 per
contract applies instead of the above-referenced complex order fee in
Penny and Non-Penny Symbols, when the Market Maker trades against
Priority Customer orders that originate from an Affiliated Member or an
Affiliated Entity.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among members and issuers and other persons using any facility,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its schedule of credits are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution
[[Page 10613]]
of order flow from broker dealers'. . . .'' \11\
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\11\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \12\
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\12\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options security transaction services. The Exchange is only one of
sixteen options exchanges to which market participants may direct their
order flow. Within this environment, market participants can freely and
often do shift their order flow among the Exchange and competing venues
in response to changes in their respective pricing schedules. As such,
the proposal represents a reasonable attempt by the Exchange to
increase its liquidity and market share relative to its competitors.
The Exchange believes that the proposed changes to its complex
order fee schedule in Options 7, Section 4 are reasonable. As discussed
above, the proposed complex order fee for all non-Priority Customers
will increase from $0.15 to $0.35 per contract in Penny Symbols. In
Non-Penny Symbols, this fee will increase from $0.15 to $0.85 per
contract for all non-Priority Customers. Priority Customers will
continue to receive free executions in all symbols under this proposal.
While the non-Priority Customer complex fees are increasing across the
board for all symbols, the Exchange believes that the proposing pricing
will remain competitive and in line with other options exchanges that
charge complex order fees.\13\ When the Exchange first adopted complex
functionality and related fees back in 2019, it initially set non-
Priority Customer complex fees at $0.15 per contract (i.e., the current
rate).\14\ The Exchange adopted this initial pricing structure (which
was lower than certain options exchanges that had comparable complex
pricing) to enable it to effectively compete with other exchanges by
attracting complex order flow to the Exchange, thereby helping the
Exchange to gain market share for complex executions. After more than
three years, the Exchange now believes that it is appropriate and
reasonable to adjust these fees in order to bring them in line with
complex fees charged at other options exchanges.
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\13\ For example, MIAX Emerald charges complex order fees in
Penny Classes that range from $0.10 to $0.50 per contract for all
origin types except Priority Customers, depending on whether the
market participant is a maker or taker. In Non-Penny Classes, those
fees range from $0.20 to $0.88 per contract for all origin types
except Priority Customer, depending on whether the market
participant is a maker or taker. See MIAX Emerald Fee Schedule,
Section 1)a)i) at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_1_9_2023.pdf.
\14\ See Securities Exchange Act Release No. 86326 (July 8,
2019), 84 FR 33300 (July 12, 2019) (SR-MRX-2019-14).
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Furthermore, the Exchange believes that the proposed fee structure
for non-Priority Customer complex orders is equitable and not unfairly
discriminatory because it will apply uniformly to all similarly
situated participants. The Exchange believes that it is equitable and
not unfairly discriminatory to continue to offer Priority Customers
free executions in complex orders in all symbols. Priority Customer
liquidity benefits all market participants by providing more trading
opportunities, which attracts Market Makers. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants.
Lastly, the Exchange believes that the proposed changes to note 2
in Options 7, Section 4 are reasonable, equitable, and not unfairly
discriminatory because these are clarifying changes to reflect that the
Exchange will continue to provide Market Makers with the reduced fee
described above for their complex orders in all symbols when the Market
Maker trades against Priority Customer orders that originate from an
Affiliated Member or Affiliated Entity.
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.
In terms of intra-market competition, the Exchange does not believe
that its proposals will place any category of market participant at a
competitive disadvantage. As noted above, the proposed changes will
apply uniformly to all similarly situated market participants.
In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
options exchanges. Because competitors are free to modify their own
fees in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which fee changes in this market may impose any burden on competition
is extremely limited. As discussed above for the proposed non-Priority
Customer complex fee structure, the Exchange notes that its proposal
will bring this pricing in line with other options exchanges that offer
similar complex functionality.\15\
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\15\ See supra note 13.
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In sum, if the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or 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.\16\ 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: (i) necessary or appropriate in the public
interest; (ii) for the protection of investors; or (iii) otherwise in
furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings
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to determine whether the proposed rule should be approved or
disapproved.
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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-MRX-2023-03 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-MRX-2023-03. 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-MRX-2023-03 and should be submitted on
or before March 14, 2023.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-03484 Filed 2-17-23; 8:45 am]
BILLING CODE 8011-01-P
