Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule, 14406-14409 [2023-04684]
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14406
Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97021; File No. SR–MIAX–
2023–09]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule
March 2, 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 February
24, 2023, 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 adopt fees for a
new data product known as the
Liquidity Taker Event Report—Resting
Simple Orders.3
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.
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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.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See, generally, Exchange Rule 531(c).
2 17
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange recently adopted a new
data product known as the Liquidity
Taker Event Report—Resting Simple
Orders (the ‘‘Report’’), which will be
available for purchase to Exchange
Members 4 on a voluntary basis. The
Exchange now proposes to adopt fees
for the Report. The proposal to adopt
the Report was recently published by
the Securities and Exchange
Commission (‘‘Commission’’) and is
described under Exchange Rule 531(c).5
The Report is an optional product
available to Members.
By way of background, the Report is
a daily report that provides a Member
(‘‘Recipient Member’’) with its liquidity
response time details for executions of
an order resting on the Simple Order
Book.6 The Report focuses on
executions and contra-side responses
that occurred after 200 microseconds of
the time the resting order was received
by the Exchange and within 200
microseconds of receipt of the first
attempt to execute against the resting
order after the initial 200 microsecond
time period has expired.
The following information is included
in the Report regarding the resting
order: (A) the time the resting order was
received by the Exchange; (B) symbol;
(C) order reference number, which is a
unique reference number assigned to a
new order at the time of receipt; (D)
whether the Recipient Member is an
Affiliate 7 of the Member that entered
the resting order; 8 (E) origin type (e.g.,
4 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
5 See Securities Exchange Act Release No. 96839
(February 8, 2023) (SR–MIAX–2023–02) (Notice of
Filing and Immediate Effectiveness of a Proposed
Rule Change to Amend Exchange Rule 531, Reports
and Market Data Products, to Provide for the New
‘‘Liquidity Taker Event Report—Resting Simple
Orders’’).
6 The term ‘‘Simple Order Book’’ means ‘‘the
Exchange’s regular electronic book of orders and
quotes.’’ See Exchange Rule 518(a)(17).
7 The term ‘‘affiliate’’ of or person ‘‘affiliated
with’’ another person means a person who, directly,
or indirectly, controls, is controlled by, or is under
common control with, such other person. See
Exchange Rule 100.
8 The Report will simply indicate whether the
Recipient Member is Affiliate of the Member that
entered the resting order and not include any other
information that may indicate the identity of the
Member that entered the resting order.
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Priority Customer,9 Market Maker 10);
(F) side (buy or sell); and (G) displayed
price and size of the resting order.
The following information is included
in the Report regarding the execution of
the resting order: (A) the MBBO 11 at the
time of execution; 12 (B) the ABBO 13 at
the time of execution; 14 (C) the time
first response that executes against the
resting order was received by the
Exchange and the size of the execution
and type of the response; 15 and (D)
whether the response was entered by
the Recipient Member.
The following information is included
in the Report regarding response(s) sent
by the Recipient Member: (A) Recipient
Member identifier; (B) the time
difference between the time the first
response that executes against the
resting order was received by the
Exchange and the time of each response
sent by the Recipient Member,
regardless of whether it executed or
not; 16 (C) size and type of each response
submitted by Recipient Member; and (D)
response reference number, which is a
unique reference number attached to the
response by the Recipient Member.
The Exchange proposes to amend
Section 7), Reports, of the Fee Schedule,
to add a new row for the Report, which
will provide that Members may
9 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
The number of orders shall be counted in
accordance with Interpretation and Policy .01. See
Exchange Rule 100.
10 The term ‘‘Market Maker’’ refers to ‘‘Lead
Market Makers’’, ‘‘Primary Lead Market Makers’’
and ‘‘Registered Market Makers’’ collectively. See
Exchange Rule 100.
11 The term ‘‘MBBO’’ means the best bid or offer
on the Exchange. See Exchange Rule 100.
12 Exchange Rule 531(c)(1)(ii)(A) provides that if
the resting order executes against multiple contraside responses, only the MBBO at the time of the
execution against the first response will be
included.
13 The term ‘‘ABBO’’ or ‘‘Away Best Bid or Offer’’
means the best bid(s) or offer(s) disseminated by
other Eligible Exchanges (defined in Exchange Rule
1400(g)) and calculated by the Exchange based on
market information received by the Exchange from
OPRA. See Exchange Rule 100.
14 Exchange Rule 531(c)(1)(ii)(B) further provides
that if the resting order executes against multiple
contra-side responses, only the ABBO at the time
of the execution against the first response will be
included.
15 The time the Exchange received the response
order would be in nanoseconds and would be the
time the response was received by the Exchange’s
network, which is before the time the response
would be received by the System.
16 For purposes of calculating this duration of
time, the Exchange will use the time the resting
order and the Recipient Member’s response(s) is
received by the Exchange’s network, both of which
would be before the order and response(s) would
be received by the System. This time difference
would be provided in nanoseconds.
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Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices
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purchase the Report on a monthly or
annual (12-month) basis. The Exchange
proposes to assess a monthly fee of
$2,000 per month and a fee of $12,000
per year for a 12-month subscription for
the Report. Members may cancel their
subscription at any time. The Exchange
also proposes to specify that for midmonth subscriptions, new subscribers
will be charged for the full calendar
month for which they subscribe and
will be provided Report data for each
trading day of the calendar month prior
to the day on which they subscribed.
The Exchange intends to begin to offer
the Report and charge the proposed fees
on March 1, 2023.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,17 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,18 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, 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 to protect investors and the
public interest, and that it is not
designed to permit unfair
discrimination among customers,
brokers, or dealers. The Exchange also
believes that its proposal to adopt fees
for the Report is consistent with Section
6(b) of the Act 19 in general, and furthers
the objectives of Section 6(b)(4) of the
Act 20 in particular, in that it is an
equitable allocation of dues, fees and
other charges among its Members and
other recipients of Exchange data.
In adopting Regulation NMS, the
Commission granted self-regulatory
organizations (‘‘SROs’’) and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. It was
believed that this authority would
expand the amount of data available to
consumers, and also spur innovation
and competition for the provision of
market data. The Exchange believes that
the Report further broadens the
availability of U.S. option market data to
investors consistent with the principles
of Regulation NMS. The Report also
promotes increased transparency
through the dissemination of the Report.
Particularly, the Report will benefit
investors by facilitating their prompt
access to the value added information
that is included in the Report. The
17 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
19 15 U.S.C. 78f(b).
20 15 U.S.C. 78f(b)(4).
18 15
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Report will allow Members to access
information regarding their trading
activity that they may utilize to evaluate
their own trading behavior and order
interactions.
The Exchange operates in a highly
competitive environment. Indeed, there
are currently 16 registered options
exchanges that trade options. Based on
publicly available information, no single
options exchange has more than 13% of
the equity options market share and
currently the Exchange represents only
approximately 7.02% of the equity
options market share.21 The
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Particularly, in
Regulation NMS, 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.’’ 22
Making similar data products available
to market participants fosters
competition in the marketplace, and
constrains the ability of exchanges to
charge supra-competitive fees. In the
event that a market participant views
one exchange’s data product as more
attractive than the competition, that
market participant can, and often does,
switch between similar products. The
proposed fees are a result of the
competitive environment of the U.S.
options industry as the Exchange seeks
to adopt fees to attract purchasers of the
recently introduced Report.
The Exchange believes the proposed
fees are reasonable as the proposed fees
are both modest and lower than fees
charged by the Exchange for similar data
products.23 The proposed fees for this
Report are less expensive than the
Exchange’s existing reports because the
Exchange believes that the information
21 See Market at a Glance, available at https://
www.miaxoptions.com/ (last visited February 9,
2023).
22 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
23 The Exchange offers two Liquidity Taker Event
Reports, one for Simple Orders and a second for
Complex orders that both focus on executions and
contra-side responses received within 200
microseconds of the time the resting order was
received by the Exchange. See Exchange Rules
531(a) and (b). The Exchange charges a monthly fee
of $4,000 and a discounted annual (12 month) fee
of $24,000 for each of these reports. See Fee
Schedule, Section 7, providing fees for the
Liquidity Taker Event Report—Simple Orders and
the Liquidity Taker Event Report—Complex Orders,
available at https://www.miaxoptions.com/fees/.
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14407
provided in the Report may not be as
valuable to market participants as the
other information contained in the
Exchange’s similar reports, which
measures the data in the first 200
microseconds of the time the resting
order was received by the Exchange.
While the Exchange believes that this
Report is useful, it may not be as helpful
as the other reports offered by the
Exchange. Indeed, if the Exchange
proposed fees that market participants
viewed as excessively high, then the
proposed fees would simply serve to
reduce demand for the Exchange’s data
product, which as noted, is entirely
optional. Other options exchanges are
also free to introduce their own
comparable data products with lower
prices to better compete with the
Exchange’s offering.24 As such, the
Exchange believes that the proposed
fees are reasonable and set at a level to
compete with other options exchanges
that may choose to offer similar reports.
Moreover, if a market participant views
another exchange’s potential report as
more attractive, then such market
participant can merely choose not to
purchase the Exchange’s Report and
instead purchase another exchange’s
similar data product, which may offer
similar data points, albeit based on that
other market’s trading activity.
The Exchange also believes providing
an annual subscription for an overall
lower fee than a monthly subscription is
equitable and reasonable because it
would enable the Exchange to gauge
long-term interest in the Report. A lower
annual subscription fee would also
incentivize Members to subscribe to the
Report on a long-term basis, thereby
improving the efficiency by which the
Exchange may deliver the Report by
doing so on a regular basis over a
prolonged and set period of time. The
Exchange notes it provides annual
subscriptions for similar reports.25
The Exchange also believes the
proposed fees are reasonable as they
would support the introduction of a
new market data product to Members
that are interested in gaining insight
into latency in connection with orders
24 This is supported by the BOX Exchange LLC
(‘‘BOX’’) recently copying two similar reports
recently adopted by the Exchange, namely, the
Liquidity Taker Event Report—Simple Orders,
described under Exchange Rule 531(a), and the
Liquidity Taker Event Report—Complex Orders,
described under Exchange Rule 531(b). See
Securities Exchange Act Release Nos. 94563 (March
31, 2022), 87 FR 19985 (April 6, 2022) (SR–BOX–
2022–10); and 94920 (May 16, 2022), 87 FR 31013
(May 20, 2022) (SR–BOX–2022–18).
25 See Fee Schedule, Section 7, providing annual
subscriptions for the Liquidity Taker Event
Report—Simple Orders and the Liquidity Taker
Event Report—Complex Orders, available at https://
www.miaxoptions.com/fees/.
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Federal Register / Vol. 88, No. 45 / Wednesday, March 8, 2023 / Notices
that failed to execute against an order
resting on the Exchange’s Simple Order
Book. The Report accomplishes this by
providing those Members data to
analyze by how much time their order
may have missed an execution against a
contra-side order resting on the Simple
Order Book. Members may use this data
to optimize their models and trading
patterns in an effort to yield better
execution results by calculating by how
much time their order may have missed
an execution.
Selling market data, such as the
Report, is also a means by which
exchanges compete to attract business.
To the extent that the Exchange is
successful in attracting subscribers for
the Report, it may earn trading revenues
and further enhance the value of its data
products. If the market deems the
proposed fees to be unfair or
inequitable, firms can diminish or
discontinue their use of the data and/or
avail themselves of similar products that
may be offered by other exchanges.26
The Exchange, therefore, believes that
the proposed fees for the Report reflect
the competitive environment and would
be properly assessed on Member users.
The Exchange also believes the
proposed fees are equitable and not
unfairly discriminatory as the fees
would apply equally to all users who
choose to purchase such data. It is a
business decision of each Member that
chooses to purchase the Report. The
Exchange’s proposed fees would not
differentiate between subscribers that
purchase the Report and are set at a
modest level that would allow any
interested Member to purchase such
data based on their business needs.
The Exchange reiterates that the
decision as to whether or not to
purchase the Report is entirely optional
for all potential subscribers. Indeed, no
market participant is required to
purchase the Report, and the Exchange
is not required to make the Report
available to all investors. It is entirely a
business decision of each Member to
subscribe to the Report. The Exchange
offers the Report as a convenience to
Members to provide them with
additional information regarding trading
activity on the Exchange on a delayed
basis after the close of regular trading
hours. A Member that chooses to
subscribe to the Report may discontinue
receiving the Report at any time if that
Member determines that the information
contained in the Report is no longer
useful.
26 See
16:48 Mar 07, 2023
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange made the Report available in
order to keep pace with changes in the
industry and evolving customer needs
and demands, and believes the data
product will contribute to robust
competition among national securities
exchanges. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange also does not believe
the proposed fees would cause any
unnecessary or inappropriate burden on
intermarket competition as other
exchanges are free to introduce their
own comparable data product with
lower prices to better compete with the
Exchange’s offering. The Exchange
operates in a highly competitive
environment, and its ability to price the
Report is constrained by competition
among exchanges who choose to adopt
a similar product. The Exchange must
consider this in its pricing discipline in
order to compete for the market data.
For example, proposing fees that are
excessively higher than fees for
potentially similar data products would
simply serve to reduce demand for the
Exchange’s data product, which as
discussed, market participants are under
no obligation to utilize. In this
competitive environment, potential
purchasers are free to choose which, if
any, similar product to purchase to
satisfy their need for market
information. As a result, the Exchange
believes this proposed rule change
permits fair competition among national
securities exchanges.
The Exchange does not believe the
proposed rule change would cause any
unnecessary or inappropriate burden on
intramarket competition. Particularly,
the proposed product and fees apply
uniformly to any purchaser in that the
Exchange does not differentiate between
subscribers that purchase the Report.
The proposed fees are set at a modest
level that would allow any interested
Member to purchase such data based on
their business needs.
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.
supra note 24.
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B. Self-Regulatory Organization’s
Statement on Burden on Competition
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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,27 and Rule
19b–4(f)(2) 28 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:
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–2023–09 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–2023–09. 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
27 15
28 17
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U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
08MRN1
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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–2023–09, and
should be submitted on or before March
29,2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Sherry R. Haywood,
Assistant Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fee
Schedule
March 2, 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 February
24, 2023, MIAX Emerald, LLC (‘‘MIAX
Emerald’’ 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.
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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 Emerald Fee Schedule
(the ‘‘Fee Schedule’’) to adopt fees for a
new data product known as the
Liquidity Taker Event Report—Resting
Simple Orders.3
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See, generally, Exchange Rule 531(c).
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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
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.
1. Purpose
[Release No. 34–97023; File No. SR–
EMERALD–2023–06]
1 15
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
[FR Doc. 2023–04684 Filed 3–7–23; 8:45 am]
29 17
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal
office, and at the Commission’s Public
Reference Room.
The Exchange recently adopted a new
data product known as the Liquidity
Taker Event Report—Resting Simple
Orders (the ‘‘Report’’), which will be
available for purchase to Exchange
Members 4 on a voluntary basis. The
Exchange now proposes to adopt fees
for the Report. The proposal to adopt
the Report was recently published by
the Securities and Exchange
Commission (‘‘Commission’’) and is
described under Exchange Rule 531(c).5
The Report is an optional product
available to Members.
By way of background, the Report is
a daily report that provides a Member
(‘‘Recipient Member’’) with its liquidity
response time details for executions of
an order resting on the Simple Order
Book.6 The Report focuses on
executions and contra-side responses
that occurred after 200 microseconds of
the time the resting order was received
by the Exchange and within 200
4 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
the Definitions Section of the Fee Schedule and
Exchange Rule 100.
5 See Securities Exchange Act Release No. 96762
(January 27, 2023), 88 FR 7114 (February 2, 2023)
(SR–EMERALD–2023–02) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
by MIAX Emerald, LLC to Amend Exchange Rule
531, Reports, Market Data Products and Services, to
provide for the New for the New ‘‘Liquidity Taker
Event Report—Resting Simple Orders’’).
6 The term ‘‘Simple Order Book’’ means ‘‘the
Exchange’s regular electronic book of orders and
quotes.’’ See Exchange Rule 518(a)(15).
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14409
microseconds of receipt of the first
attempt to execute against the resting
order after the initial 200 microsecond
time period has expired.
The following information is included
in the Report regarding the resting
order: (A) the time the resting order was
received by the Exchange; (B) symbol;
(C) order reference number, which is a
unique reference number assigned to a
new order at the time of receipt; (D)
whether the Recipient Member is an
Affiliate 7 of the Member that entered
the resting order; 8 (E) origin type (e.g.,
Priority Customer,9 Market Maker 10);
(F) side (buy or sell); and (G) displayed
price and size of the resting order.
The following information is included
in the Report regarding the execution of
the resting order: (A) the EBBO 11 at the
time of execution; 12 (B) the ABBO 13 at
the time of execution; 14 (C) the time
first response that executes against the
resting order was received by the
Exchange and the size of the execution
and type of the response; 15 and (D)
whether the response was entered by
the Recipient Member.
The following information is included
in the Report regarding response(s) sent
by the Recipient Member: (A) Recipient
7 The term ‘‘affiliate’’ of or person ‘‘affiliated
with’’ another person means a person who, directly,
or indirectly, controls, is controlled by, or is under
common control with, such other person. See
Exchange Rule 100.
8 The Report will simply indicate whether the
Recipient Member is Affiliate of the Member that
entered the resting order and not include any other
information that may indicate the identity of the
Member that entered the resting order.
9 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
The number of orders shall be counted in
accordance with Interpretation and Policy .01. See
Exchange Rule 100.
10 The term ‘‘Market Maker’’ refers to ‘‘Lead
Market Makers’’, ‘‘Primary Lead Market Makers’’
and ‘‘Registered Market Makers’’ collectively. See
Exchange Rule 100.
11 The term ‘‘EBBO’’ means the best bid or offer
on the Exchange. See Exchange Rule 100.
12 Exchange Rule 531(c)(1)(ii)(A) provides that if
the resting order executes against multiple contraside responses, only the EBBO at the time of the
execution against the first response will be
included.
13 The term ‘‘ABBO’’ or ‘‘Away Best Bid or Offer’’
means the best bid(s) or offer(s) disseminated by
other Eligible Exchanges (defined in Exchange Rule
1400(g)) and calculated by the Exchange based on
market information received by the Exchange from
OPRA. See Exchange Rule 100.
14 Exchange Rule 531(c)(1)(ii)(B) further provides
that if the resting order executes against multiple
contra-side responses, only the ABBO at the time
of the execution against the first response will be
included.
15 The time the Exchange received the response
order would be in nanoseconds and would be the
time the response was received by the Exchange’s
network, which is before the time the response
would be received by the System.
E:\FR\FM\08MRN1.SGM
08MRN1
Agencies
[Federal Register Volume 88, Number 45 (Wednesday, March 8, 2023)]
[Notices]
[Pages 14406-14409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04684]
[[Page 14406]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97021; File No. SR-MIAX-2023-09]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
March 2, 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 February 24, 2023, 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.
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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 is filing a proposal to amend the MIAX Options Fee
Schedule (the ``Fee Schedule'') to adopt fees for a new data product
known as the Liquidity Taker Event Report--Resting Simple Orders.\3\
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\3\ See, generally, Exchange Rule 531(c).
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The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings, at MIAX's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange recently adopted a new data product known as the
Liquidity Taker Event Report--Resting Simple Orders (the ``Report''),
which will be available for purchase to Exchange Members \4\ on a
voluntary basis. The Exchange now proposes to adopt fees for the
Report. The proposal to adopt the Report was recently published by the
Securities and Exchange Commission (``Commission'') and is described
under Exchange Rule 531(c).\5\ The Report is an optional product
available to Members.
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\4\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\5\ See Securities Exchange Act Release No. 96839 (February 8,
2023) (SR-MIAX-2023-02) (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change to Amend Exchange Rule 531,
Reports and Market Data Products, to Provide for the New ``Liquidity
Taker Event Report--Resting Simple Orders'').
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By way of background, the Report is a daily report that provides a
Member (``Recipient Member'') with its liquidity response time details
for executions of an order resting on the Simple Order Book.\6\ The
Report focuses on executions and contra-side responses that occurred
after 200 microseconds of the time the resting order was received by
the Exchange and within 200 microseconds of receipt of the first
attempt to execute against the resting order after the initial 200
microsecond time period has expired.
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\6\ The term ``Simple Order Book'' means ``the Exchange's
regular electronic book of orders and quotes.'' See Exchange Rule
518(a)(17).
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The following information is included in the Report regarding the
resting order: (A) the time the resting order was received by the
Exchange; (B) symbol; (C) order reference number, which is a unique
reference number assigned to a new order at the time of receipt; (D)
whether the Recipient Member is an Affiliate \7\ of the Member that
entered the resting order; \8\ (E) origin type (e.g., Priority
Customer,\9\ Market Maker \10\); (F) side (buy or sell); and (G)
displayed price and size of the resting order.
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\7\ The term ``affiliate'' of or person ``affiliated with''
another person means a person who, directly, or indirectly,
controls, is controlled by, or is under common control with, such
other person. See Exchange Rule 100.
\8\ The Report will simply indicate whether the Recipient Member
is Affiliate of the Member that entered the resting order and not
include any other information that may indicate the identity of the
Member that entered the resting order.
\9\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). The number of
orders shall be counted in accordance with Interpretation and Policy
.01. See Exchange Rule 100.
\10\ The term ``Market Maker'' refers to ``Lead Market Makers'',
``Primary Lead Market Makers'' and ``Registered Market Makers''
collectively. See Exchange Rule 100.
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The following information is included in the Report regarding the
execution of the resting order: (A) the MBBO \11\ at the time of
execution; \12\ (B) the ABBO \13\ at the time of execution; \14\ (C)
the time first response that executes against the resting order was
received by the Exchange and the size of the execution and type of the
response; \15\ and (D) whether the response was entered by the
Recipient Member.
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\11\ The term ``MBBO'' means the best bid or offer on the
Exchange. See Exchange Rule 100.
\12\ Exchange Rule 531(c)(1)(ii)(A) provides that if the resting
order executes against multiple contra-side responses, only the MBBO
at the time of the execution against the first response will be
included.
\13\ The term ``ABBO'' or ``Away Best Bid or Offer'' means the
best bid(s) or offer(s) disseminated by other Eligible Exchanges
(defined in Exchange Rule 1400(g)) and calculated by the Exchange
based on market information received by the Exchange from OPRA. See
Exchange Rule 100.
\14\ Exchange Rule 531(c)(1)(ii)(B) further provides that if the
resting order executes against multiple contra-side responses, only
the ABBO at the time of the execution against the first response
will be included.
\15\ The time the Exchange received the response order would be
in nanoseconds and would be the time the response was received by
the Exchange's network, which is before the time the response would
be received by the System.
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The following information is included in the Report regarding
response(s) sent by the Recipient Member: (A) Recipient Member
identifier; (B) the time difference between the time the first response
that executes against the resting order was received by the Exchange
and the time of each response sent by the Recipient Member, regardless
of whether it executed or not; \16\ (C) size and type of each response
submitted by Recipient Member; and (D) response reference number, which
is a unique reference number attached to the response by the Recipient
Member.
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\16\ For purposes of calculating this duration of time, the
Exchange will use the time the resting order and the Recipient
Member's response(s) is received by the Exchange's network, both of
which would be before the order and response(s) would be received by
the System. This time difference would be provided in nanoseconds.
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The Exchange proposes to amend Section 7), Reports, of the Fee
Schedule, to add a new row for the Report, which will provide that
Members may
[[Page 14407]]
purchase the Report on a monthly or annual (12-month) basis. The
Exchange proposes to assess a monthly fee of $2,000 per month and a fee
of $12,000 per year for a 12-month subscription for the Report. Members
may cancel their subscription at any time. The Exchange also proposes
to specify that for mid-month subscriptions, new subscribers will be
charged for the full calendar month for which they subscribe and will
be provided Report data for each trading day of the calendar month
prior to the day on which they subscribed.
The Exchange intends to begin to offer the Report and charge the
proposed fees on March 1, 2023.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\17\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\18\ in particular, in that it
is designed to prevent fraudulent and manipulative acts and practices,
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 to protect investors and the public
interest, and that it is not designed to permit unfair discrimination
among customers, brokers, or dealers. The Exchange also believes that
its proposal to adopt fees for the Report is consistent with Section
6(b) of the Act \19\ in general, and furthers the objectives of Section
6(b)(4) of the Act \20\ in particular, in that it is an equitable
allocation of dues, fees and other charges among its Members and other
recipients of Exchange data.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(5).
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4).
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Exchange believes that the Report further
broadens the availability of U.S. option market data to investors
consistent with the principles of Regulation NMS. The Report also
promotes increased transparency through the dissemination of the
Report. Particularly, the Report will benefit investors by facilitating
their prompt access to the value added information that is included in
the Report. The Report will allow Members to access information
regarding their trading activity that they may utilize to evaluate
their own trading behavior and order interactions.
The Exchange operates in a highly competitive environment. Indeed,
there are currently 16 registered options exchanges that trade options.
Based on publicly available information, no single options exchange has
more than 13% of the equity options market share and currently the
Exchange represents only approximately 7.02% of the equity options
market share.\21\ The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Particularly,
in Regulation NMS, 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.'' \22\ Making
similar data products available to market participants fosters
competition in the marketplace, and constrains the ability of exchanges
to charge supra-competitive fees. In the event that a market
participant views one exchange's data product as more attractive than
the competition, that market participant can, and often does, switch
between similar products. The proposed fees are a result of the
competitive environment of the U.S. options industry as the Exchange
seeks to adopt fees to attract purchasers of the recently introduced
Report.
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\21\ See Market at a Glance, available at https://www.miaxoptions.com/ (last visited February 9, 2023).
\22\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes the proposed fees are reasonable as the
proposed fees are both modest and lower than fees charged by the
Exchange for similar data products.\23\ The proposed fees for this
Report are less expensive than the Exchange's existing reports because
the Exchange believes that the information provided in the Report may
not be as valuable to market participants as the other information
contained in the Exchange's similar reports, which measures the data in
the first 200 microseconds of the time the resting order was received
by the Exchange. While the Exchange believes that this Report is
useful, it may not be as helpful as the other reports offered by the
Exchange. Indeed, if the Exchange proposed fees that market
participants viewed as excessively high, then the proposed fees would
simply serve to reduce demand for the Exchange's data product, which as
noted, is entirely optional. Other options exchanges are also free to
introduce their own comparable data products with lower prices to
better compete with the Exchange's offering.\24\ As such, the Exchange
believes that the proposed fees are reasonable and set at a level to
compete with other options exchanges that may choose to offer similar
reports. Moreover, if a market participant views another exchange's
potential report as more attractive, then such market participant can
merely choose not to purchase the Exchange's Report and instead
purchase another exchange's similar data product, which may offer
similar data points, albeit based on that other market's trading
activity.
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\23\ The Exchange offers two Liquidity Taker Event Reports, one
for Simple Orders and a second for Complex orders that both focus on
executions and contra-side responses received within 200
microseconds of the time the resting order was received by the
Exchange. See Exchange Rules 531(a) and (b). The Exchange charges a
monthly fee of $4,000 and a discounted annual (12 month) fee of
$24,000 for each of these reports. See Fee Schedule, Section 7,
providing fees for the Liquidity Taker Event Report--Simple Orders
and the Liquidity Taker Event Report--Complex Orders, available at
https://www.miaxoptions.com/fees/.
\24\ This is supported by the BOX Exchange LLC (``BOX'')
recently copying two similar reports recently adopted by the
Exchange, namely, the Liquidity Taker Event Report--Simple Orders,
described under Exchange Rule 531(a), and the Liquidity Taker Event
Report--Complex Orders, described under Exchange Rule 531(b). See
Securities Exchange Act Release Nos. 94563 (March 31, 2022), 87 FR
19985 (April 6, 2022) (SR-BOX-2022-10); and 94920 (May 16, 2022), 87
FR 31013 (May 20, 2022) (SR-BOX-2022-18).
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The Exchange also believes providing an annual subscription for an
overall lower fee than a monthly subscription is equitable and
reasonable because it would enable the Exchange to gauge long-term
interest in the Report. A lower annual subscription fee would also
incentivize Members to subscribe to the Report on a long-term basis,
thereby improving the efficiency by which the Exchange may deliver the
Report by doing so on a regular basis over a prolonged and set period
of time. The Exchange notes it provides annual subscriptions for
similar reports.\25\
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\25\ See Fee Schedule, Section 7, providing annual subscriptions
for the Liquidity Taker Event Report--Simple Orders and the
Liquidity Taker Event Report--Complex Orders, available at https://www.miaxoptions.com/fees/.
---------------------------------------------------------------------------
The Exchange also believes the proposed fees are reasonable as they
would support the introduction of a new market data product to Members
that are interested in gaining insight into latency in connection with
orders
[[Page 14408]]
that failed to execute against an order resting on the Exchange's
Simple Order Book. The Report accomplishes this by providing those
Members data to analyze by how much time their order may have missed an
execution against a contra-side order resting on the Simple Order Book.
Members may use this data to optimize their models and trading patterns
in an effort to yield better execution results by calculating by how
much time their order may have missed an execution.
Selling market data, such as the Report, is also a means by which
exchanges compete to attract business. To the extent that the Exchange
is successful in attracting subscribers for the Report, it may earn
trading revenues and further enhance the value of its data products. If
the market deems the proposed fees to be unfair or inequitable, firms
can diminish or discontinue their use of the data and/or avail
themselves of similar products that may be offered by other
exchanges.\26\ The Exchange, therefore, believes that the proposed fees
for the Report reflect the competitive environment and would be
properly assessed on Member users. The Exchange also believes the
proposed fees are equitable and not unfairly discriminatory as the fees
would apply equally to all users who choose to purchase such data. It
is a business decision of each Member that chooses to purchase the
Report. The Exchange's proposed fees would not differentiate between
subscribers that purchase the Report and are set at a modest level that
would allow any interested Member to purchase such data based on their
business needs.
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\26\ See supra note 24.
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The Exchange reiterates that the decision as to whether or not to
purchase the Report is entirely optional for all potential subscribers.
Indeed, no market participant is required to purchase the Report, and
the Exchange is not required to make the Report available to all
investors. It is entirely a business decision of each Member to
subscribe to the Report. The Exchange offers the Report as a
convenience to Members to provide them with additional information
regarding trading activity on the Exchange on a delayed basis after the
close of regular trading hours. A Member that chooses to subscribe to
the Report may discontinue receiving the Report at any time if that
Member determines that the information contained in the Report is no
longer useful.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
made the Report available in order to keep pace with changes in the
industry and evolving customer needs and demands, and believes the data
product will contribute to robust competition among national securities
exchanges. As a result, the Exchange believes this proposed rule change
permits fair competition among national securities exchanges.
The Exchange also does not believe the proposed fees would cause
any unnecessary or inappropriate burden on intermarket competition as
other exchanges are free to introduce their own comparable data product
with lower prices to better compete with the Exchange's offering. The
Exchange operates in a highly competitive environment, and its ability
to price the Report is constrained by competition among exchanges who
choose to adopt a similar product. The Exchange must consider this in
its pricing discipline in order to compete for the market data. For
example, proposing fees that are excessively higher than fees for
potentially similar data products would simply serve to reduce demand
for the Exchange's data product, which as discussed, market
participants are under no obligation to utilize. In this competitive
environment, potential purchasers are free to choose which, if any,
similar product to purchase to satisfy their need for market
information. As a result, the Exchange believes this proposed rule
change permits fair competition among national securities exchanges.
The Exchange does not believe the proposed rule change would cause
any unnecessary or inappropriate burden on intramarket competition.
Particularly, the proposed product and fees apply uniformly to any
purchaser in that the Exchange does not differentiate between
subscribers that purchase the Report. The proposed fees are set at a
modest level that would allow any interested Member to purchase such
data based on their business needs.
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,\27\ and Rule 19b-4(f)(2) \28\ 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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\27\ 15 U.S.C. 78s(b)(3)(A)(ii).
\28\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MIAX-2023-09 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-2023-09. 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
[[Page 14409]]
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-2023-09, and should be submitted on or before March 29, 2023.
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\29\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-04684 Filed 3-7-23; 8:45 am]
BILLING CODE 8011-01-P