Self-Regulatory Organizations; Miami International Securities Exchange, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule for the Priority Customer Rebate Program and the Professional Rebate Program, 41706-41710 [2023-13457]
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Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Notices
Inter-Market Competition
The Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchanges if they
deem fee levels and incentives at those
other exchanges to be more favorable.
As noted above, the Exchange’s market
share is currently 6.87%.19 In such an
environment, the Exchange must
continually adjust its fees and rebates to
remain competitive with other
exchanges. Because competitors are free
to modify their own fees and credits in
response, and because market
participants may readily adjust their
own order routing practices, the
Exchange does not believe its proposed
fee change can impose any burden on
inter-market competition.
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,20 and Rule
19b–4(f)(2) 21 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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IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–PEARL–2023–26. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–PEARL–2023–26 and should be
submitted on or before July 18, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–13455 Filed 6–26–23; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
PEARL–2023–26 on the subject line.
supra note 15.
U.S.C. 78s(b)(3)(A)(ii).
21 17 CFR 240.19b–4(f)(2).
22 17
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Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of
Withdrawal of a Proposed Rule Change
To Amend Its Fee Schedule
June 21, 2023.
On April 17, 2023, Cboe BZX
Exchange, Inc. (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend its fee schedule. The
proposed rule change was published for
comment in the Federal Register on
May 3, 2023.3 The Commission did not
receive any comment letters. On June 1,
2023, the Exchange withdrew the
proposed rule change (CboeBZX–2023–
026).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.4
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–13563 Filed 6–26–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97771; File No. SR–MIAX–
2023–24]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fee Schedule for
the Priority Customer Rebate Program
and the Professional Rebate Program
June 20, 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 June 9,
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
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 97392
(April 27, 2023), 88 FR 27937.
4 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
2 17
20 15
18:54 Jun 26, 2023
[Release No. 34–97781; File No. SR–
CboeBZX–2023–026]
1 15
19 See
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COMMISSION
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Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Notices
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 Fee Schedule (‘‘Fee
Schedule’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxoptions.com/rulefilings, at MIAX’s principal office, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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1. Purpose
The Exchange proposes to (i) amend
Section 1)a)iii) of the Fee Schedule to
modify the Priority Customer Rebate
Program (‘‘PCRP’’) 3 to remove a certain
incremental rebate; and (ii) amend
Section 1)a)iv) of the Fee Schedule to
modify the Professional Rebate Program
to simplify the calculation and
application of the rebate. The Exchange
3 Under the PCRP, MIAX credits each Member the
per contract amount resulting from each Priority
Customer order transmitted by that Member which
is executed electronically on the Exchange in all
multiply-listed option classes (excluding, in simple
or complex as applicable, QCC and cQCC Orders,
mini-options, Priority Customer-to-Priority
Customer Orders, C2C and cC2C Orders, PRIME and
cPRIME AOC Responses, PRIME and cPRIME
Contra-side Orders, PRIME and cPRIME Orders for
which both the Agency and Contra-side Order are
Priority Customers, and executions related to
contracts that are routed to one or more exchanges
in connection with the Options Order Protection
and Locked/Crossed Market Plan referenced in
Exchange Rule 1400), provided the Member meets
certain percentage thresholds in a month as
described in the Priority Customer Rebate Program
table. See Fee Schedule, Section 1)a)iii. 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.
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originally filed this proposal on May 31,
2023, (SR–MIAX–2023–21). On June 9,
2023, the Exchange withdrew SR–
MIAX–2023–21 and resubmitted this
proposal.
Background
Priority Customer Rebate Program
The Exchange’s Fee Schedule
provides for a Priority Customer Rebate
Program, under which a Priority
Customer 4 rebate payment is calculated
from the first executed contract at the
applicable threshold per contract credit
with rebate payments made at the
highest achieved volume tier for each
contract traded in that month. The
percentage thresholds are calculated
based on the percentage of national
customer volume in multiply-listed
option classes listed on MIAX entered
and executed over the course of the
month (excluding QCC 5 and cQCC
Orders,6 Priority Customer-to-Priority
Customer Orders, C2C,7 and cC2C
Orders,8 PRIME 9 and cPRIME AOC
Responses, PRIME and cPRIME Contraside Orders, and PRIME and cPRIME
Orders 10 for which both the Agency and
Contra-side Order are Priority
Customers). Volume for transactions in
4 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
See Exchange Rule 100.
5 A Qualified Contingent Cross Order is
comprised of an originating order to buy or sell at
least 1,000 contracts, or 10,000 mini-option
contracts, that is identified as being part of a
qualified contingent trade, as that term is defined
in Interpretations and Policies .01 below, coupled
with a contra-side order or orders totaling an equal
number of contracts. See Exchange Rule 516(j).
6 A Complex Qualified Contingent Cross or
‘‘cQCC’’ Order is comprised of an originating
complex order to buy or sell where each component
is at least 1,000 contracts that is identified as being
part of a qualified contingent trade, as defined in
Rule 516, Interpretations and Policies .01, coupled
with a contra-side complex order or orders totaling
an equal number of contracts. Trading of cQCC
Orders is governed by Rule 515(h)(4). See Exchange
Rule 518(b)(6).
7 A Customer Cross Order is comprised of a
Priority Customer Order to buy and a Priority
Customer Order to sell at the same price and for the
same quantity. See Exchange Rule 516(i).
8 A Complex Customer Cross or ‘‘cC2C’’ Order is
comprised of one Priority Customer complex order
to buy and one Priority Customer complex order to
sell at the same price and for the same quantity.
Trading of cC2C Orders is governed by Rule
515(h)(3). See Exchange Rule 518(b)(5).
9 PRIME is a process by which a Member may
electronically submit for execution (‘‘Auction’’) an
order it represents as agent (‘‘Agency Order’’)
against principal interest, and/or an Agency Order
against solicited interest. See Exchange Rule
515A(a).
10 A Complex Prime or ‘‘cPRIME’’ Order is a
complex order (as defined in Rule 518(a)(5)) that is
submitted for participation in a cPRIME Auction.
See Exchange Rule 518(b)(7).
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41707
both simple and complex orders are
aggregated to determine the appropriate
volume tier threshold applicable to each
transaction. Volume is recorded for, and
credits are delivered to, the Member 11
that submits the order to MIAX. MIAX
aggregates the contracts resulting from
Priority Customer Orders 12 transmitted
and executed electronically on MIAX
from Members and Affiliates 13 for
purposes of the thresholds described in
the PCRP table.
Currently, MIAX will credit each
‘‘Qualifying Member’’ $0.03 per contract
(excluding QCC and cQCC Orders, minioptions, Priority Customer-to-Priority
Customer Orders, C2C and cC2C Orders,
PRIME and cPRIME Agency Orders,
PRIME and cPRIME AOC Responses,
PRIME and cPRIME Contra-side Orders,
PRIME and cPRIME Orders for which
both the Agency and Contra-side Order
are Priority Customers, and executions
related to contracts that are routed to
one or more exchanges in connection
with the Options Order Protection and
Locked/Crossed Market Plan referenced
11 The term ‘‘Member’’ means an individual or
organization approved to exercise the trading rights
associated with a Trading Permit. Members are
deemed ‘‘members’’ under the Exchange Act. See
Exchange Rule 100.
12 The term ‘‘Priority Customer Order’’ means an
order for the account of a Priority Customer. See
Exchange Rule 100.
13 For purposes of the MIAX Options Fee
Schedule, the term ‘‘Affiliate’’ means (i) an affiliate
of a Member of at least 75% common ownership
between the firms as reflected on each firm’s Form
BD, Schedule A, (‘‘Affiliate’’), or (ii) the Appointed
Market Maker of an Appointed EEM (or, conversely,
the Appointed EEM of an Appointed Market
Maker). An ‘‘Appointed Market Maker’’ is a MIAX
Market Maker (who does not otherwise have a
corporate affiliation based upon common
ownership with an EEM) that has been appointed
by an EEM and an ‘‘Appointed EEM’’ is an EEM
(who does not otherwise have a corporate affiliation
based upon common ownership with a MIAX
Market Maker) that has been appointed by a MIAX
Market Maker, pursuant to the following process. A
MIAX Market Maker appoints an EEM and an EEM
appoints a MIAX Market Maker, for the purposes
of the Fee Schedule, by each completing and
sending an executed Volume Aggregation Request
Form by email to membership@miaxoptions.com no
later than 2 business days prior to the first business
day of the month in which the designation is to
become effective. Transmittal of a validly
completed and executed form to the Exchange along
with the Exchange’s acknowledgement of the
effective designation to each of the Market Maker
and EEM will be viewed as acceptance of the
appointment. The Exchange will only recognize one
designation per Member. A Member may make a
designation not more than once every 12 months
(from the date of its most recent designation), which
designation shall remain in effect unless or until the
Exchange receives written notice submitted 2
business days prior to the first business day of the
month from either Member indicating that the
appointment has been terminated. Designations will
become operative on the first business day of the
effective month and may not be terminated prior to
the end of the month. Execution data and reports
will be provided to both parties. See Fee Schedule,
note 1.
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Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Notices
in MIAX Rule 1400) resulting from each
Priority Customer order in simple or
complex order executions which falls
within the Priority Customer Rebate
Program volume tier 1. ‘‘Qualifying
Member’’ shall mean a Member or its
Affiliate that qualifies for the
Professional Rebate Program as
described below and achieves a volume
increase in excess of 0.065% for
Professional orders transmitted by that
Member which are executed
electronically on the Exchange in all
multiply-listed option classes for the
account(s) of a Professional and which
qualify for the Professional Rebate
Program during a particular month
relative to the applicable Baseline
Percentage (as defined under the
Professional Rebate Program).
The Exchange initially adopted this
rebate in 2016 in order to provide an
incentive for order flow providers to
increase the volume of Professional
orders and Priority Customer Orders
submitted to the Exchange.14 The
Exchange has observed that not a single
Member has qualified for the
incremental credit in the last six
months. Since the incremental credit
has not been utilized in recent months,
the Exchange has determined to
eliminate the incremental credit and
now proposes to remove this incentive
from the Exchange’s Fee Schedule.
Professional Rebate Program
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Under the Professional Rebate
Program, which is set forth in Section
1)a)iv) of the Fee Schedule, the
Exchange credits each Member a per
contract amount resulting from any
contracts executed from an order
submitted by that Member for the
account of a: (i) Public Customer 15 that
is not a Priority Customer; 16 (ii) nonMIAX Options Market Maker; 17 (iii)
non-Member Broker-Dealer; or (iv)
14 See Securities Exchange Act Release No. 77777
(May 6, 2016), 81 FR 29603 (May 12, 2016) (SR–
MIAX–2016–09).
15 The term ‘‘Public Customer’’ means a person
that is not a broker or dealer in securities. See
Exchange Rule 100.
16 ‘‘Priority Customer’’ means a person or entity
that (i) is not a broker or dealer in securities, and
(ii) does not place more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial accounts(s). See Exchange
Rule 100, including Interpretations and Policies .01.
17 The term ‘‘Market Makers’’ refers to Lead
Market Makers (‘‘LMMs’’), Primary Lead Market
Makers (‘‘PLMMs’’), and Registered Market Makers
(‘‘RMMs’’) collectively. See Exchange Rule 100. A
Directed Order Lead Market Maker (‘‘DLMM’’) and
Directed Primary Lead Market Maker (‘‘DPLMM’’) is
a party to a transaction being allocated to the LMM
or PLMM and is the result of an order that has been
directed to the LMM or PLMM. See Fee Schedule
note 2.
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Firm 18 (each, a ‘‘Professional’’), which
is executed electronically on the
Exchange in all multiply-listed option
classes (excluding, in simple or complex
as applicable, mini-options, non-Priority
Customer-to-non-Priority Customer
orders, QCC orders, PRIME orders,
PRIME AOC responses, PRIME contraside orders, and executions related to
contracts that are routed to one or more
exchanges in connection with the
Options Order Protection and Locked/
Crossed Market Plan referenced in
MIAX Options Rule 1400 (collectively,
‘‘Excluded Contracts’’)), provided the
Member achieves certain Professional
volume increase percentage thresholds
in the month relative to a baseline
period.
Currently, the percentage thresholds
in each tier are based upon the increase
in the total volume submitted by a
Member and executed for the account(s)
of a Professional on MIAX (not
including Excluded Contracts) during a
particular month as a percentage of the
total volume reported by the Options
Clearing Corporation (OCC) in MIAX
classes during the same month (the
‘‘Current Percentage’’), less the greater
of (x) total volume submitted by that
Member and executed for the account(s)
of a Professional on MIAX (not
including Excluded Contracts) during
the fourth quarter of 2015 as a
percentage of the total volume reported
by OCC in MIAX classes during the
fourth quarter of 2015, and (y) 0.065%
(the ‘‘Baseline Percentage’’). Volume for
transactions in both simple and
complex orders will be aggregated to
determine the appropriate volume tier
threshold applicable to each transaction.
For purposes of determining the
Baseline Percentage for any Member
that did not execute any contracts for
the account(s) of a Professional on
MIAX in the fourth quarter of 2015, the
Baseline Percentage shall be 0.065%.
The Exchange now proposes to adjust
the method of calculating the Baseline
Percentage for the rebate by removing
the provision relating to the fourth
quarter of 2015 from the calculation. As
proposed, the percentage thresholds in
each tier will be based upon the
increase in the total volume submitted
by a Member and executed for the
account(s) of a Professional on MIAX
Options (not including Excluded
Contracts) during a particular month as
a percentage of the total volume
reported by the Options Clearing
18 A ‘‘Firm’’ fee is assessed on a MIAX Electronic
Exchange Member ‘‘EEM’’ that enters an order that
is executed for an account identified by the EEM
for clearing in the Options Clearing Corporation
(‘‘OCC’’) ‘‘Firm’’ range. See Fee Schedule, Section
1)a)ii.
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Corporation (OCC) in MIAX classes
during the same month (the ‘‘Current
Percentage’’), less 0.065% (the Baseline
Percentage). Volume for transactions in
both simple and complex orders will be
aggregated to determine the appropriate
volume tier threshold applicable to each
transaction.
Given that the Baseline Percentage is
standardized under the Exchange’s
proposal, the Exchange also proposes to
remove the last sentence from the
paragraph that describes the calculation,
which states, ‘‘for purposes of
determining the Baseline Percentage for
any Member that did not execute any
contracts for the account(s) of a
Professional on MIAX in the fourth
quarter of 2015, the Baseline Percentage
shall be 0.065%,’’ as this sentence is
unnecessary given the proposed change
to the calculation methodology.
The Exchange also proposes to amend
the column heading on the Professional
Rebate Program table to reflect the
proposed change. Currently the column
heading is titled, ‘‘Percentage
Thresholds of Volume Increase in
Multiply-Listed Options (except
Excluded Contracts) for the Current
Month Compared to Fourth Quarter
2015.’’ The Exchange now proposes to
re-title this column heading as,
‘‘Percentage Thresholds of Volume
Increase in Multiply-Listed Options
(except Excluded Contracts) for the
Current Month Compared to the
Baseline Percentage,’’ to accurately
reflect the methodology being used to
determine the applicable tier.
The purpose for making these
adjustments is to standardize and
simplify the application of the
Exchange’s incentive program.
Implementation
The proposed changes are
immediately effective.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule 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 reasonable dues, fees, and
other charges among its members and
issuers and other persons using its
facilities. The Exchange also believes
the proposal furthers the objectives of
Section 6(b)(5) of the Act 21 in that it is
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
19 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
21 15 U.S.C. 78f(b)(5).
20 15
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Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Notices
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest and is not designed to
permit unfair discrimination between
customers, issuers, brokers and dealers.
The Exchange believes its proposal
provides for the equitable allocation of
reasonable dues and fees and is not
unfairly discriminatory for the following
reasons. The Exchange operates in a
highly competitive market in which
market participants can readily direct
order flow to competing venues if they
deem fee levels at a particular venue to
be excessive or incentives to be
insufficient. More specifically, the
Exchange is one of 16 registered options
exchanges competing for order flow.
Based on publicly-available
information, and excluding index-based
options, no single exchange has more
than approximately 12–13% of the
market share of executed volume of
multiply-listed equity and exchangetraded fund (‘‘ETF’’) options trades as of
May 25, 2023, for the month of May
2023.22 Therefore, no exchange
possesses significant pricing power in
the execution of multiply-listed equity
and ETF options order flow. More
specifically, as of May 25, 2023, the
Exchange has a total market share of
6.58% of all equity options volume, for
the month of May 2023.23
The Exchange believes that the evershifting market share among the
exchanges from month to month
demonstrates that market participants
can shift order flow, or discontinue use
of certain categories of products, in
response to fee changes. For example,
on March 1, 2019, the Exchange filed
with the Commission an immediately
effective filing to decrease certain
credits assessable to Members pursuant
to the PCRP.24 The Exchange
experienced a decrease in total market
share between the months of February
and March of 2019. Accordingly, the
Exchange believes that the March 1,
2019, fee change may have contributed
to the decrease in the Exchange’s market
share and, as such, the Exchange
believes competitive forces constrain
options exchange transaction and nontransaction fees.
Accordingly, competitive forces
constrain the Exchange’s transaction
fees, and market participants can readily
trade on competing venues if they deem
pricing levels at those other venues to
22 See ‘‘The market at a glance/MTD AVERAGE’’,
available at https://www.miaxglobal.com/ (data as
of 5/1/2023–5/25/2023).
23 See id.
24 See Securities Exchange Act Release No. 85301
(March 13, 2019), 84 FR 10166 (March 19, 2019)
(SR–MIAX–2019–09).
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be more favorable. In response to the
competitive environment, the Exchange
offers specific rates and credits in its
fees schedule, like those of other
options exchanges’ fees schedules,
which the Exchange believes provides
incentives to Members to increase order
flow of certain qualifying orders.
The Exchange believes that its
proposal to eliminate an incremental
credit in the Priority Customer Rebate
Program is reasonable because the
pricing incentive has been underutilized
and has not incentivized Members to
increase the volume of Professional
orders and Priority Customer Orders
submitted to the Exchange as
anticipated. The Exchange notes that no
Member has availed itself of the
incremental credit in the last six
months. The Exchange also does not
anticipate that any Member will qualify
for the pricing incentive that is the
subject of this proposal in the near
future. The Exchange believes that it is
reasonable to eliminate incentives when
such incentives are underutilized. The
Exchange believes that eliminating
incentive programs from the Fee
Schedule when such incentives become
ineffective is equitable and not unfairly
discriminatory because the incentive
would be eliminated in its entirety and
would no longer be available to any
Member.
Similarly, the Exchange believes that
its proposal to simplify the application
of a rebate under the Professional Rebate
Program is reasonable because it
standardizes the application of the
rebate for all eligible Members. The
Exchange believes it is reasonable to
amend the requirements of a rebate
when the amendment simplifies and
standardizes the application of the
rebate.
The Exchange notes that all Members
would continue to be subject to the
same fee structure, and access to the
Exchange’s market would continue to be
offered on fair and non-discriminatory
terms. The Exchange also believes that
the proposed changes would protect
investors and the public interest
because the removal of an underutilized
pricing incentive in the PCRP and the
simplification of the calculation of a
rebate in the Professional Rebate
Program would simplify the Fee
Schedule and facilitate market
participants’ understanding of the fees
charged and rebates offered by the
Exchange.
As noted above, the Exchange
operates in a highly competitive market.
The Commission has repeatedly
expressed its preference for competition
over regulatory intervention in
determining prices, products, and
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41709
services in the securities markets. In
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and selfregulatory organization (‘‘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.’’ 25
The Exchange believes that the evershifting market shares among the
exchanges from month to month
demonstrates that market participants
can shift order flow or discontinue or
reduce use of certain categories of
products, in response to transaction and
non-transaction fee changes.
Accordingly, competitive forces
constrain the Exchange’s transaction
fees and rebates, and market
participants can readily trade on
competing venues if they deem pricing
levels at those other venues to be more
favorable.
For the reasons discussed above, the
Exchange submits that the proposal
satisfies the requirements of Sections
6(b)(4) and 6(b)(5) of the Act 26 in that
it provides for the equitable allocation
of reasonable dues, fees and other
charges among its Members and other
persons using its facilities and is not
designed to unfairly discriminate
between customers, issuers, brokers, or
dealers.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposed change will not impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
Intra-Market Competition
The Exchange does not believe that
the proposal will impose any burden on
intra-market competition not necessary
or appropriate in furtherance of the
purposes of the Act. The Exchange
believes the elimination of an
underutilized rebate from the PCRP will
not place any undue burden on intramarket competition that is not necessary
or appropriate in furtherance of the
purposes of the Act given that not a
single Member has qualified for the
credit proposed for removal in the last
six months. Additionally, the Exchange
believes that the simplification of a
rebate calculation in the Professional
Rebate Program will not impose any
burden on intra-market competition as
25 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496 (June 29, 2005).
26 15 U.S.C. 78f(b)(4) and (5).
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41710
Federal Register / Vol. 88, No. 122 / Tuesday, June 27, 2023 / Notices
the simplification and standardization
of a rebate calculation applies uniformly
to all Members and all Members are still
eligible to earn the rebate.
Therefore the Exchange does not
believe that its proposal will impose any
burden on intra-market competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Inter-Market Competition
The Exchange operates in a highly
competitive market in which market
participants can readily choose to send
their orders to other exchanges if they
deem fee levels and incentives at those
other exchanges to be more favorable.
As noted above, the Exchange’s market
share is currently 6.58%.27 In such an
environment, the Exchange must
continually adjust its fees and rebates to
remain competitive with other
exchanges. Because competitors are free
to modify their own fees and credits in
response, and because market
participants may readily adjust their
own order routing practices, the
Exchange does not believe its proposed
fee change can impose any burden on
inter-market competition.
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,28 and Rule
19b–4(f)(2) 29 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.
ddrumheller on DSK120RN23PROD with NOTICES1
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:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
[Release No. 34–97782; File No. SR–
CboeBZX–2023–020]
• 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–2023–24 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–2023–24. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–MIAX–2023–24 and should be
submitted on or before July 18, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–13457 Filed 6–26–23; 8:45 am]
BILLING CODE 8011–01–P
27 See
supra note 22.
U.S.C. 78s(b)(3)(A)(ii).
29 17 CFR 240.19b–4(f)(2).
28 15
VerDate Sep<11>2014
18:54 Jun 26, 2023
30 17
Jkt 259001
PO 00000
CFR 200.30–3(a)(12).
Frm 00125
Fmt 4703
Sfmt 4703
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of
Withdrawal of a Proposed Rule Change
To Amend Its Fee Schedule
June 21, 2023.
On March 6, 2023, Cboe BZX
Exchange, Inc. (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend its fee schedule. The
proposed rule change was published for
comment in the Federal Register on
March 16, 2023.3 On May 4, 2023, the
Commission temporarily suspended the
proposed rule change and instituted
proceedings to determine whether to
approve or disapprove the proposed
rule change.4 On June 14, 2023, the
Exchange withdrew the proposed rule
change (CboeBZX–2023–020).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023–13565 Filed 6–26–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97784; File No. SR–FINRA–
2022–032]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of Longer Period for Commission
Action on Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change Relating to
Alternative Display Facility New
Entrant
June 21, 2023.
On December 16, 2022, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘Commission’’),
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 97108
(March 10, 2023), 88 FR 16285. The comment
letters received on the proposed rule change are
available on the Commission’s website at: https://
www.sec.gov/comments/sr-cboebzx-2023-020/
srcboebzx2023020.htm.
4 See Securities Exchange Act Release No. 97437,
88 FR 30181 (May 10, 2023).
5 17 CFR 200.30–3(a)(12).
2 17
E:\FR\FM\27JNN1.SGM
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]]>Agencies
[Federal Register Volume 88, Number 122 (Tuesday, June 27, 2023)]
[Notices]
[Pages 41706-41710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-13457]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97771; File No. SR-MIAX-2023-24]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule for the Priority
Customer Rebate Program and the Professional Rebate Program
June 20, 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 June 9, 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
[[Page 41707]]
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Fee Schedule
(``Fee Schedule'').
The text of the proposed rule change is available on the Exchange's
website at https://www.miaxoptions.com/rule-filings, at MIAX's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to (i) amend Section 1)a)iii) of the Fee
Schedule to modify the Priority Customer Rebate Program (``PCRP'') \3\
to remove a certain incremental rebate; and (ii) amend Section 1)a)iv)
of the Fee Schedule to modify the Professional Rebate Program to
simplify the calculation and application of the rebate. The Exchange
originally filed this proposal on May 31, 2023, (SR-MIAX-2023-21). On
June 9, 2023, the Exchange withdrew SR-MIAX-2023-21 and resubmitted
this proposal.
---------------------------------------------------------------------------
\3\ Under the PCRP, MIAX credits each Member the per contract
amount resulting from each Priority Customer order transmitted by
that Member which is executed electronically on the Exchange in all
multiply-listed option classes (excluding, in simple or complex as
applicable, QCC and cQCC Orders, mini-options, Priority Customer-to-
Priority Customer Orders, C2C and cC2C Orders, PRIME and cPRIME AOC
Responses, PRIME and cPRIME Contra-side Orders, PRIME and cPRIME
Orders for which both the Agency and Contra-side Order are Priority
Customers, and executions related to contracts that are routed to
one or more exchanges in connection with the Options Order
Protection and Locked/Crossed Market Plan referenced in Exchange
Rule 1400), provided the Member meets certain percentage thresholds
in a month as described in the Priority Customer Rebate Program
table. See Fee Schedule, Section 1)a)iii. 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.
---------------------------------------------------------------------------
Background
Priority Customer Rebate Program
The Exchange's Fee Schedule provides for a Priority Customer Rebate
Program, under which a Priority Customer \4\ rebate payment is
calculated from the first executed contract at the applicable threshold
per contract credit with rebate payments made at the highest achieved
volume tier for each contract traded in that month. The percentage
thresholds are calculated based on the percentage of national customer
volume in multiply-listed option classes listed on MIAX entered and
executed over the course of the month (excluding QCC \5\ and cQCC
Orders,\6\ Priority Customer-to-Priority Customer Orders, C2C,\7\ and
cC2C Orders,\8\ PRIME \9\ and cPRIME AOC Responses, PRIME and cPRIME
Contra-side Orders, and PRIME and cPRIME Orders \10\ for which both the
Agency and Contra-side Order are Priority Customers). Volume for
transactions in both simple and complex orders are aggregated to
determine the appropriate volume tier threshold applicable to each
transaction. Volume is recorded for, and credits are delivered to, the
Member \11\ that submits the order to MIAX. MIAX aggregates the
contracts resulting from Priority Customer Orders \12\ transmitted and
executed electronically on MIAX from Members and Affiliates \13\ for
purposes of the thresholds described in the PCRP table.
---------------------------------------------------------------------------
\4\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100.
\5\ A Qualified Contingent Cross Order is comprised of an
originating order to buy or sell at least 1,000 contracts, or 10,000
mini-option contracts, that is identified as being part of a
qualified contingent trade, as that term is defined in
Interpretations and Policies .01 below, coupled with a contra-side
order or orders totaling an equal number of contracts. See Exchange
Rule 516(j).
\6\ A Complex Qualified Contingent Cross or ``cQCC'' Order is
comprised of an originating complex order to buy or sell where each
component is at least 1,000 contracts that is identified as being
part of a qualified contingent trade, as defined in Rule 516,
Interpretations and Policies .01, coupled with a contra-side complex
order or orders totaling an equal number of contracts. Trading of
cQCC Orders is governed by Rule 515(h)(4). See Exchange Rule
518(b)(6).
\7\ A Customer Cross Order is comprised of a Priority Customer
Order to buy and a Priority Customer Order to sell at the same price
and for the same quantity. See Exchange Rule 516(i).
\8\ A Complex Customer Cross or ``cC2C'' Order is comprised of
one Priority Customer complex order to buy and one Priority Customer
complex order to sell at the same price and for the same quantity.
Trading of cC2C Orders is governed by Rule 515(h)(3). See Exchange
Rule 518(b)(5).
\9\ PRIME is a process by which a Member may electronically
submit for execution (``Auction'') an order it represents as agent
(``Agency Order'') against principal interest, and/or an Agency
Order against solicited interest. See Exchange Rule 515A(a).
\10\ A Complex Prime or ``cPRIME'' Order is a complex order (as
defined in Rule 518(a)(5)) that is submitted for participation in a
cPRIME Auction. See Exchange Rule 518(b)(7).
\11\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
\12\ The term ``Priority Customer Order'' means an order for the
account of a Priority Customer. See Exchange Rule 100.
\13\ For purposes of the MIAX Options Fee Schedule, the term
``Affiliate'' means (i) an affiliate of a Member of at least 75%
common ownership between the firms as reflected on each firm's Form
BD, Schedule A, (``Affiliate''), or (ii) the Appointed Market Maker
of an Appointed EEM (or, conversely, the Appointed EEM of an
Appointed Market Maker). An ``Appointed Market Maker'' is a MIAX
Market Maker (who does not otherwise have a corporate affiliation
based upon common ownership with an EEM) that has been appointed by
an EEM and an ``Appointed EEM'' is an EEM (who does not otherwise
have a corporate affiliation based upon common ownership with a MIAX
Market Maker) that has been appointed by a MIAX Market Maker,
pursuant to the following process. A MIAX Market Maker appoints an
EEM and an EEM appoints a MIAX Market Maker, for the purposes of the
Fee Schedule, by each completing and sending an executed Volume
Aggregation Request Form by email to [email protected] no
later than 2 business days prior to the first business day of the
month in which the designation is to become effective. Transmittal
of a validly completed and executed form to the Exchange along with
the Exchange's acknowledgement of the effective designation to each
of the Market Maker and EEM will be viewed as acceptance of the
appointment. The Exchange will only recognize one designation per
Member. A Member may make a designation not more than once every 12
months (from the date of its most recent designation), which
designation shall remain in effect unless or until the Exchange
receives written notice submitted 2 business days prior to the first
business day of the month from either Member indicating that the
appointment has been terminated. Designations will become operative
on the first business day of the effective month and may not be
terminated prior to the end of the month. Execution data and reports
will be provided to both parties. See Fee Schedule, note 1.
---------------------------------------------------------------------------
Currently, MIAX will credit each ``Qualifying Member'' $0.03 per
contract (excluding QCC and cQCC Orders, mini-options, Priority
Customer-to-Priority Customer Orders, C2C and cC2C Orders, PRIME and
cPRIME Agency Orders, PRIME and cPRIME AOC Responses, PRIME and cPRIME
Contra-side Orders, PRIME and cPRIME Orders for which both the Agency
and Contra-side Order are Priority Customers, and executions related to
contracts that are routed to one or more exchanges in connection with
the Options Order Protection and Locked/Crossed Market Plan referenced
[[Page 41708]]
in MIAX Rule 1400) resulting from each Priority Customer order in
simple or complex order executions which falls within the Priority
Customer Rebate Program volume tier 1. ``Qualifying Member'' shall mean
a Member or its Affiliate that qualifies for the Professional Rebate
Program as described below and achieves a volume increase in excess of
0.065% for Professional orders transmitted by that Member which are
executed electronically on the Exchange in all multiply-listed option
classes for the account(s) of a Professional and which qualify for the
Professional Rebate Program during a particular month relative to the
applicable Baseline Percentage (as defined under the Professional
Rebate Program).
The Exchange initially adopted this rebate in 2016 in order to
provide an incentive for order flow providers to increase the volume of
Professional orders and Priority Customer Orders submitted to the
Exchange.\14\ The Exchange has observed that not a single Member has
qualified for the incremental credit in the last six months. Since the
incremental credit has not been utilized in recent months, the Exchange
has determined to eliminate the incremental credit and now proposes to
remove this incentive from the Exchange's Fee Schedule.
---------------------------------------------------------------------------
\14\ See Securities Exchange Act Release No. 77777 (May 6,
2016), 81 FR 29603 (May 12, 2016) (SR-MIAX-2016-09).
---------------------------------------------------------------------------
Professional Rebate Program
Under the Professional Rebate Program, which is set forth in
Section 1)a)iv) of the Fee Schedule, the Exchange credits each Member a
per contract amount resulting from any contracts executed from an order
submitted by that Member for the account of a: (i) Public Customer \15\
that is not a Priority Customer; \16\ (ii) non-MIAX Options Market
Maker; \17\ (iii) non-Member Broker-Dealer; or (iv) Firm \18\ (each, a
``Professional''), which is executed electronically on the Exchange in
all multiply-listed option classes (excluding, in simple or complex as
applicable, mini-options, non-Priority Customer-to-non-Priority
Customer orders, QCC orders, PRIME orders, PRIME AOC responses, PRIME
contra-side orders, and executions related to contracts that are routed
to one or more exchanges in connection with the Options Order
Protection and Locked/Crossed Market Plan referenced in MIAX Options
Rule 1400 (collectively, ``Excluded Contracts'')), provided the Member
achieves certain Professional volume increase percentage thresholds in
the month relative to a baseline period.
---------------------------------------------------------------------------
\15\ The term ``Public Customer'' means a person that is not a
broker or dealer in securities. See Exchange Rule 100.
\16\ ``Priority Customer'' means a person or entity that (i) is
not a broker or dealer in securities, and (ii) does not place more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial accounts(s). See Exchange Rule
100, including Interpretations and Policies .01.
\17\ The term ``Market Makers'' refers to Lead Market Makers
(``LMMs''), Primary Lead Market Makers (``PLMMs''), and Registered
Market Makers (``RMMs'') collectively. See Exchange Rule 100. A
Directed Order Lead Market Maker (``DLMM'') and Directed Primary
Lead Market Maker (``DPLMM'') is a party to a transaction being
allocated to the LMM or PLMM and is the result of an order that has
been directed to the LMM or PLMM. See Fee Schedule note 2.
\18\ A ``Firm'' fee is assessed on a MIAX Electronic Exchange
Member ``EEM'' that enters an order that is executed for an account
identified by the EEM for clearing in the Options Clearing
Corporation (``OCC'') ``Firm'' range. See Fee Schedule, Section
1)a)ii.
---------------------------------------------------------------------------
Currently, the percentage thresholds in each tier are based upon
the increase in the total volume submitted by a Member and executed for
the account(s) of a Professional on MIAX (not including Excluded
Contracts) during a particular month as a percentage of the total
volume reported by the Options Clearing Corporation (OCC) in MIAX
classes during the same month (the ``Current Percentage''), less the
greater of (x) total volume submitted by that Member and executed for
the account(s) of a Professional on MIAX (not including Excluded
Contracts) during the fourth quarter of 2015 as a percentage of the
total volume reported by OCC in MIAX classes during the fourth quarter
of 2015, and (y) 0.065% (the ``Baseline Percentage''). Volume for
transactions in both simple and complex orders will be aggregated to
determine the appropriate volume tier threshold applicable to each
transaction. For purposes of determining the Baseline Percentage for
any Member that did not execute any contracts for the account(s) of a
Professional on MIAX in the fourth quarter of 2015, the Baseline
Percentage shall be 0.065%.
The Exchange now proposes to adjust the method of calculating the
Baseline Percentage for the rebate by removing the provision relating
to the fourth quarter of 2015 from the calculation. As proposed, the
percentage thresholds in each tier will be based upon the increase in
the total volume submitted by a Member and executed for the account(s)
of a Professional on MIAX Options (not including Excluded Contracts)
during a particular month as a percentage of the total volume reported
by the Options Clearing Corporation (OCC) in MIAX classes during the
same month (the ``Current Percentage''), less 0.065% (the Baseline
Percentage). Volume for transactions in both simple and complex orders
will be aggregated to determine the appropriate volume tier threshold
applicable to each transaction.
Given that the Baseline Percentage is standardized under the
Exchange's proposal, the Exchange also proposes to remove the last
sentence from the paragraph that describes the calculation, which
states, ``for purposes of determining the Baseline Percentage for any
Member that did not execute any contracts for the account(s) of a
Professional on MIAX in the fourth quarter of 2015, the Baseline
Percentage shall be 0.065%,'' as this sentence is unnecessary given the
proposed change to the calculation methodology.
The Exchange also proposes to amend the column heading on the
Professional Rebate Program table to reflect the proposed change.
Currently the column heading is titled, ``Percentage Thresholds of
Volume Increase in Multiply-Listed Options (except Excluded Contracts)
for the Current Month Compared to Fourth Quarter 2015.'' The Exchange
now proposes to re-title this column heading as, ``Percentage
Thresholds of Volume Increase in Multiply-Listed Options (except
Excluded Contracts) for the Current Month Compared to the Baseline
Percentage,'' to accurately reflect the methodology being used to
determine the applicable tier.
The purpose for making these adjustments is to standardize and
simplify the application of the Exchange's incentive program.
Implementation
The proposed changes are immediately effective.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
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 reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities. The Exchange also believes the proposal furthers
the objectives of Section 6(b)(5) of the Act \21\ in that it is
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the
[[Page 41709]]
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest and is not
designed to permit unfair discrimination between customers, issuers,
brokers and dealers.
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4).
\21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes its proposal provides for the equitable
allocation of reasonable dues and fees and is not unfairly
discriminatory for the following reasons. The Exchange operates in a
highly competitive market in which market participants can readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive or incentives to be insufficient. More
specifically, the Exchange is one of 16 registered options exchanges
competing for order flow. Based on publicly-available information, and
excluding index-based options, no single exchange has more than
approximately 12-13% of the market share of executed volume of
multiply-listed equity and exchange-traded fund (``ETF'') options
trades as of May 25, 2023, for the month of May 2023.\22\ Therefore, no
exchange possesses significant pricing power in the execution of
multiply-listed equity and ETF options order flow. More specifically,
as of May 25, 2023, the Exchange has a total market share of 6.58% of
all equity options volume, for the month of May 2023.\23\
---------------------------------------------------------------------------
\22\ See ``The market at a glance/MTD AVERAGE'', available at
https://www.miaxglobal.com/ (data as of 5/1/2023-5/25/2023).
\23\ See id.
---------------------------------------------------------------------------
The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow, or discontinue use of certain categories of products,
in response to fee changes. For example, on March 1, 2019, the Exchange
filed with the Commission an immediately effective filing to decrease
certain credits assessable to Members pursuant to the PCRP.\24\ The
Exchange experienced a decrease in total market share between the
months of February and March of 2019. Accordingly, the Exchange
believes that the March 1, 2019, fee change may have contributed to the
decrease in the Exchange's market share and, as such, the Exchange
believes competitive forces constrain options exchange transaction and
non-transaction fees.
---------------------------------------------------------------------------
\24\ See Securities Exchange Act Release No. 85301 (March 13,
2019), 84 FR 10166 (March 19, 2019) (SR-MIAX-2019-09).
---------------------------------------------------------------------------
Accordingly, competitive forces constrain the Exchange's
transaction fees, and market participants can readily trade on
competing venues if they deem pricing levels at those other venues to
be more favorable. In response to the competitive environment, the
Exchange offers specific rates and credits in its fees schedule, like
those of other options exchanges' fees schedules, which the Exchange
believes provides incentives to Members to increase order flow of
certain qualifying orders.
The Exchange believes that its proposal to eliminate an incremental
credit in the Priority Customer Rebate Program is reasonable because
the pricing incentive has been underutilized and has not incentivized
Members to increase the volume of Professional orders and Priority
Customer Orders submitted to the Exchange as anticipated. The Exchange
notes that no Member has availed itself of the incremental credit in
the last six months. The Exchange also does not anticipate that any
Member will qualify for the pricing incentive that is the subject of
this proposal in the near future. The Exchange believes that it is
reasonable to eliminate incentives when such incentives are
underutilized. The Exchange believes that eliminating incentive
programs from the Fee Schedule when such incentives become ineffective
is equitable and not unfairly discriminatory because the incentive
would be eliminated in its entirety and would no longer be available to
any Member.
Similarly, the Exchange believes that its proposal to simplify the
application of a rebate under the Professional Rebate Program is
reasonable because it standardizes the application of the rebate for
all eligible Members. The Exchange believes it is reasonable to amend
the requirements of a rebate when the amendment simplifies and
standardizes the application of the rebate.
The Exchange notes that all Members would continue to be subject to
the same fee structure, and access to the Exchange's market would
continue to be offered on fair and non-discriminatory terms. The
Exchange also believes that the proposed changes would protect
investors and the public interest because the removal of an
underutilized pricing incentive in the PCRP and the simplification of
the calculation of a rebate in the Professional Rebate Program would
simplify the Fee Schedule and facilitate market participants'
understanding of the fees charged and rebates offered by the Exchange.
As noted above, the Exchange operates in a highly competitive
market. The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
determining prices and self-regulatory organization (``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.'' \25\
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\25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
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The Exchange believes that the ever-shifting market shares among
the exchanges from month to month demonstrates that market participants
can shift order flow or discontinue or reduce use of certain categories
of products, in response to transaction and non-transaction fee
changes. Accordingly, competitive forces constrain the Exchange's
transaction fees and rebates, and market participants can readily trade
on competing venues if they deem pricing levels at those other venues
to be more favorable.
For the reasons discussed above, the Exchange submits that the
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of
the Act \26\ in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its Members and other
persons using its facilities and is not designed to unfairly
discriminate between customers, issuers, brokers, or dealers.
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\26\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed change will not impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Intra-Market Competition
The Exchange does not believe that the proposal will impose any
burden on intra-market competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes the
elimination of an underutilized rebate from the PCRP will not place any
undue burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act given that not a
single Member has qualified for the credit proposed for removal in the
last six months. Additionally, the Exchange believes that the
simplification of a rebate calculation in the Professional Rebate
Program will not impose any burden on intra-market competition as
[[Page 41710]]
the simplification and standardization of a rebate calculation applies
uniformly to all Members and all Members are still eligible to earn the
rebate.
Therefore the Exchange does not believe that its proposal will
impose any burden on intra-market competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
Inter-Market Competition
The Exchange operates in a highly competitive market in which
market participants can readily choose to send their orders to other
exchanges if they deem fee levels and incentives at those other
exchanges to be more favorable. As noted above, the Exchange's market
share is currently 6.58%.\27\ In such an environment, the Exchange must
continually adjust its fees and rebates to remain competitive with
other exchanges. Because competitors are free to modify their own fees
and credits in response, and because market participants may readily
adjust their own order routing practices, the Exchange does not believe
its proposed fee change can impose any burden on inter-market
competition.
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\27\ See supra note 22.
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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,\28\ and Rule 19b-4(f)(2) \29\ 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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\28\ 15 U.S.C. 78s(b)(3)(A)(ii).
\29\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-MIAX-2023-24 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-2023-24. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MIAX-2023-24 and should be
submitted on or before July 18, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-13457 Filed 6-26-23; 8:45 am]
BILLING CODE 8011-01-P
