Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule at Options 7 To Specify Pricing Related to Unrelated Market or Marketable Interest, 67381-67385 [2023-21343]

Download as PDF Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: lotter on DSK11XQN23PROD with NOTICES1 Electronic Comments All submissions should refer to file number SR–PEARL–2023–49 and should be submitted on or before October 20, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.26 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–21350 Filed 9–28–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98504; File No. SR–MRX– 2023–17] • 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–2023–49 on the subject line. Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Pricing Schedule at Options 7 To Specify Pricing Related to Unrelated Market or Marketable Interest Paper Comments September 25, 2023. • 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–2023–49. 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. VerDate Sep<11>2014 21:46 Sep 28, 2023 Jkt 259001 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 September 14, 2023, Nasdaq MRX, LLC (‘‘MRX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Pricing Schedule at Options 7 to specify pricing related to unrelated market or marketable interest. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/mrx/rules, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the 26 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00157 Fmt 4703 Sfmt 4703 67381 proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Exchange’s Pricing Schedule at Options 7 to specify pricing related to unrelated market or marketable interest. Specifically, the Exchange proposes to specify the current manner in which the Exchange assesses fees and rebates with respect to unrelated market or marketable interest received prior to the commencement of an auction in the Facilitation Mechanism (‘‘FAC’’),3 Solicited Order Mechanism (‘‘SOL’’),4 and Price Improvement Mechanism (‘‘PIM’’),5 and during such auctions. In addition, the Exchange also proposes a number of non-substantive amendments to Options 7 that will bring more clarity to the Exchange’s Pricing Schedule. Each change is discussed below. 3 The Facilitation Mechanism is a process by which an Electronic Access Member can execute a transaction wherein the Electronic Access Member seeks to facilitate a block-size order it represents as agent, and/or a transaction wherein the Electronic Access Member solicited interest to execute against a block-size order it represents as agent. Electronic Access Members must be willing to execute the entire size of orders entered into the Facilitation Mechanism. See Options 3, Section 11(b). Additionally, Electronic Access Members may use the Facilitation Mechanism to execute block-size Complex Orders at a net price. See Options 3, Section 11(c) for the rules governing complex Facilitation Mechanism. 4 The Solicited Order Mechanism is a process by which an Electronic Access Member can attempt to execute orders of 500 or more contracts it represents as agent (the ‘‘Agency Order’’) against contra orders that it solicited. Each order entered into the Solicited Order Mechanism shall be designated as all-or-none. See Options 3, Section 11(d). Additionally, Electronic Access Members may use the Solicited Order Mechanism to execute Complex Orders at a net price. See Options 3, Section 11(e) for the rules governing complex Solicited Order Mechanism. 5 The Price Improvement Mechanism is a process by which an Electronic Access Member can provide price improvement opportunities for a transaction wherein the Electronic Access Member seeks to facilitate an order it represents as agent, and/or a transaction wherein the Electronic Access Member solicited interest to execute against an order it represents as agent. See Options 3, Section 13. Additionally, Electronic Access Members may use the Price Improvement Mechanism to execute Complex Orders at a net price. See Options 3, Section 13(e) for the rules governing complex Price Improvement Mechanism. E:\FR\FM\29SEN1.SGM 29SEN1 67382 Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 Unrelated Interest As a general rule, today, if an order executed in FAC (‘‘FAC Order’’), SOL (‘‘SOL Order’’), or PIM (‘‘PIM Order’’) executes against unrelated market or marketable interest received during an auction, the Exchange would assess the applicable Crossing Order 6 pricing in Section 3, Table 2 and Section 3.A of its Pricing Schedule. If the FAC, SOL, or PIM Order executes against unrelated market or marketable interest received prior to an auction, the Exchange would assess applicable order book pricing in its Pricing Schedule. As discussed below, the Exchange applies these concepts to unrelated market or marketable interest in line with Member expectations and to treat similarly situated Members in a uniform manner. The Exchange notes that it currently denotes in the Pricing Schedule that it would apply separate Crossing Order pricing for any contra-side interest submitted after the commencement of an auction in FAC, SOL, or PIM (which includes unrelated market and marketable interest received during the auction) by grouping such interest as Responses to Crossing Orders.7 The Exchange further notes that today, it specifies throughout Options 7 how it will price Responses to Crossing Orders.8 While the Exchange has delineated the treatment of unrelated market and marketable interest received by the Exchange during a FAC, SOL, and PIM auction in its Pricing Schedule, the Exchange believes that further clarity would be beneficial to Members as to how the Exchange currently assesses pricing for such interest received prior to the commencement of the auction. As such, the Exchange proposes to memorialize these concepts in its Pricing Schedule by adding new paragraph (d) to Options 7, Section 1, titled ‘‘Unrelated Market or Marketable 6 A ‘‘Crossing Order’’ is an order executed in the Exchange’s Facilitation Mechanism, Solicited Order Mechanism, Price Improvement Mechanism (‘‘PIM’’) or submitted as a Qualified Contingent Cross order. For purposes of this Pricing Schedule, orders executed in the Block Order Mechanism are also considered Crossing Orders. 7 ‘‘Responses to Crossing Order’’ is any contraside interest (i.e., orders & quotes) submitted after the commencement of an auction in the Exchange’s Facilitation Mechanism, Solicited Order Mechanism, Block Order Mechanism or Price Improvement Mechanism. Contra-side interest in this context therefore includes both contra-side interest submitted specifically in response to an auction notification, and unrelated market and marketable contra-side interest submitted to the order book during the auction. 8 See Section 3, Table 2 (setting forth regular order fees for Responses to Crossing Orders except PIM Orders); Section 3.A (setting forth regular and complex order fees for Responses to PIM Orders) and Section 4 (setting forth complex order fees for Responses to Crossing Orders except PIM Orders). VerDate Sep<11>2014 21:46 Sep 28, 2023 Jkt 259001 Interest Pricing.’’ Proposed paragraph (d) would state that the following concepts would apply to FAC, SOL, and PIM Orders. Specifically, under proposed new paragraph (d), when the FAC Order or SOL Order executes against unrelated market or marketable interest received during an auction, the FAC Order or SOL Order will be assessed the applicable Fee for Crossing Orders in Options 7, Section 3, Table 2 (for regular FAC Orders and SOL Orders) 9 and applicable Complex Order fees in Options 7, Section 4 (for complex FAC Orders and SOL Orders).10 The unrelated market or marketable interest received during an auction will be assessed the applicable fees for Responses to Crossing Order in Options 7, Section 3, Table 2 (for regular interest) 11 and applicable Complex Order fees in Options 7, Section 4 (for complex interest).12 When the order executed in PIM (‘‘PIM Order’’) executes against unrelated market or marketable interest received during an auction, the PIM Order will be assessed the applicable PIM Originating Order fees 13 or Breakup Rebates 14 in Options 7, Section 3.A 9 Thus the regular FAC and SOL Order would be assessed the current regular Penny and Non-Penny Symbol fee for Crossing Orders as follows: $0.20 per contract for a Market Maker, Non-Nasdaq MRX Market Maker (FarMM), Firm Proprietary/BrokerDealer, and Professional Customer, and $0.00 per contract for a Priority Customer. 10 Thus the complex FAC and SOL Order would be assessed the current complex Penny Symbol fee of $0.35 per contract and complex Non-Penny Symbol fee of $0.85 per contract for all market participants except Priority Customers, which do not get assessed a complex fee. 11 Thus, unrelated interest would be assessed the current regular Penny Symbol fee for Responses to Crossing Orders of $0.50 per contract for all market participants. Further, they would be assessed the current regular Non-Penny Symbol fee for Responses to Crossing Orders of $1.10 per contract for all market participants. 12 As stated in Options 7, Section 4, the complex order fees apply to responses to complex FAC and SOL Orders, except complex PIM Orders, which are subject to separate PIM response fees in Options 7, Section 3.A. Thus, unrelated interest would be assessed the current complex Penny Symbol fee of $0.35 per contract and complex Non-Penny Symbol fee of $0.85 per contract for all market participants except Priority Customers, which do not get assessed a complex fee. 13 Thus both regular and complex PIM Orders would be assessed the current Penny and NonPenny Symbol PIM pricing as follows: $0.20 PIM originating order fee for all market participants except Priority Customers, who do not get assessed this fee, and $0.02 PIM contra-side order fee for all market participants. 14 Break-up Rebates only apply to regular PIM Orders of 500 or fewer contracts and to complex PIM Orders where the largest leg is 500 or fewer contracts, and are provided for an originating Priority Customer PIM Order that executes with any response (order or quote) other than the PIM contraside order. The Penny Symbol Break-up Rebate is currently $0.25 per contract for a Priority Customer PO 00000 Frm 00158 Fmt 4703 Sfmt 4703 (for regular and complex PIM Orders). The unrelated market or marketable interest received during an auction will be assessed the applicable fees for Responses to PIM Orders in Options 7, Section 3.A (for regular and complex interest).15 In contrast, today, when the FAC Order, SOL Order, or PIM Order executes against unrelated market or marketable interest received prior to the commencement of an auction, the FAC Order, SOL Order, or PIM Order would be subject to the applicable taker pricing in Options 7, Section 3, Table 1 (for regular FAC Orders, SOL Orders, and PIM Orders) 16 and the applicable Complex Order fees in Options 7, Section 4 (for complex FAC Orders, SOL Orders, and PIM Orders).17 The unrelated market or marketable interest received prior to the commencement of an auction will be assessed the applicable maker pricing in Options 7, Section 3, Table 1 (for regular interest),18 and the applicable Complex originating PIM Order. The Non-Penny Symbol Break-up Rebate is currently $0.60 per contract for a Priority Customer originating PIM Order. 15 Thus, unrelated interest would be assessed the current regular and complex Penny Symbol fee for Responses to PIM Orders of $0.50 per contract for all market participants. Further, they would be assessed the current regular and complex NonPenny Symbol fee for Responses to PIM Orders of $1.10 per contract for all market participants. 16 Thus the regular FAC, SOL, and PIM Order would be assessed the current regular Penny Symbol Taker Fees as follows: $0.50 per contract for a Market Maker, Non-Nasdaq MRX Market Maker (FarMM), Firm Proprietary/Broker-Dealer, and Professional Customer (regardless of tier achieved), $0.15 per contract for a Priority Customer (Tiers 1– 3), and $0.10 per contract for a Priority Customer (Tier 4). Further, they would be assessed the following regular Non-Penny Taker Fees: $1.10 per contract for a Market Maker, Non-Nasdaq MRX Market Maker (FarMM), Firm Proprietary/BrokerDealer, and Professional Customer (regardless of tier achieved), $0.35 per contract for a Priority Customer (Tier 1), $0.25 per contract for a Priority Customer (Tier 2), $0.15 per contract for a Priority Customer (Tier 3), and $0.10 per contract for a Priority Customer (Tier 4). 17 Thus the complex FAC, SOL, and PIM Order would be assessed the current complex Penny Symbol fee of $0.35 per contract and complex NonPenny Symbol fee of $0.85 per contract for all market participants except Priority Customers, which do not get assessed a complex fee. 18 Thus, unrelated interest would be assessed the current regular Penny Symbol Maker Fees/Rebates as follows: $0.10 per contract fee for a Market Maker (Tier 1), $0.00 per contract fee for a Market Maker (Tier 2), $0.05 per contract rebate for a Market Maker (Tier 3), $0.10 per contract rebate for a Market Maker (Tier 4), $0.47 per contract fee for a Non-Nasdaq MRX Market Maker (FarMM), Firm Proprietary/Broker-Dealer, and Professional Customer (regardless of tier achieved), and $0.00 per contract fee for a Priority Customer (regardless of tier achieved). Further, they would be assessed the following regular Non-Penny Maker Fees: $0.35 per contract for a Market Maker (Tier 1), $0.20 per contract for a Market Maker (Tier 2), $0.15 per contract for a Market Maker (Tier 3), $0.10 per contract for a Market Maker (Tier 4), $0.90 per E:\FR\FM\29SEN1.SGM 29SEN1 Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 Order fees in Options 7, Section 4 (for complex interest).19 Unrelated market or marketable interest resting on the Exchange’s order book, whether received prior to the commencement of a FAC, SOL, or PIM auction or during such auction, would be allocated in accordance with Options 3, Section 11(b)(4) and (c)(7) (for regular and complex FAC), Section 11(d)(3) and (e)(4) (for regular and complex SOL), and Section 13(d) and (e)(5) (for regular and complex PIM). The Exchange applies order book pricing in accordance with Options 7, Sections 3 and 4 to interest received prior to a FAC, SOL, and PIM auction that subsequently trades with a FAC, SOL, or PIM Order (which is considered unrelated market or marketable interest for purposes of the auction) because the Exchange seeks to treat the Member who submitted such interest in a similar manner as any other Member who submits interest to the order book. The Member that submitted such interest would not have been aware at the time that a FAC, SOL, or PIM auction was in progress, and therefore would not have expected to be assessed separate Crossing Order pricing.20 In such instances, for regular interest, the unrelated market or marketable interest that posted to the order book prior to the commencement of the auction would be treated as posting liquidity to the order book (makers of liquidity) and assessed maker pricing in accordance with Options 7, Section 3, Table 1. The FAC, SOL, and PIM Order that trades against the unrelated interest would be considered as removing liquidity from the order book (takers of liquidity) and assessed taker pricing in accordance with Options 7, Section 3, Table 1. This is consistent with taker pricing assessed to any Member that removes liquidity from the order book. For complex interest, the Exchange currently assesses uniform complex order fees for similarly situated market participants as set forth contract for a Non-Nasdaq MRX Market Maker (FarMM), Firm Proprietary/Broker-Dealer, and Professional Customer (regardless of tier achieved), and $0.00 per contract for a Priority Customer (regardless of tier achieved). 19 Thus, unrelated interest would be assessed the current complex Penny Symbol fee of $0.35 per contract and complex Non-Penny Symbol fee of $0.85 per contract for all market participants except Priority Customers, which do not get assessed a complex fee. 20 Members become aware of ongoing FAC, SOL, and PIM auctions as the Exchange disseminates an auction notification in the form of a ‘‘broadcast message’’ when the Exchange receives a FAC, SOL, and PIM Order for auction processing. The broadcast message is sent by the Exchange to all Members and includes the series, price, side, and size of the Agency Order. See Options 3, Sections 11(b)(2), 11(d)(2), and 13(c). VerDate Sep<11>2014 21:46 Sep 28, 2023 Jkt 259001 in Options 7, Section 4, regardless of maker/taker. As such, both the unrelated market or marketable interest that posted to the complex order book prior to the commencement of the complex FAC/SOL/PIM auction and the complex FAC/SOL/PIM Order would be assessed the applicable complex order fee, consistent with any complex order submitted to the complex order book. In contrast, the Exchange applies Crossing Order pricing in Options 7, Sections 3 and 4 to the unrelated market or marketable interest when the interest arrived during a FAC, SOL, and PIM auction. Members submitting interest to the order book during one of these auctions are aware that they may be allocated in the auction.21 The Exchange assesses the applicable response fee in Options 7, Section 3 and Section 4 to Members submitting such interest in the same manner that responders to the FAC, SOL, and PIM auction are assessed fees for their auction responses. In other words, the unrelated market or marketable interest that received an allocation within the FAC, SOL, or PIM auction would be uniformly subject to the same fees as those Members that submitted auction responses and were allocated. The Exchange’s pricing models for the regular/complex order book and FAC/ SOL/PIM auctions each seek to attract liquidity to the Exchange and reward Members differently for the different types of order flow. To this end, the Exchange’s pricing considers the manner in which orders interact with the FAC/SOL/PIM auction based on the timing of when the order entered which order book. The Exchange’s pricing is consistent with its current practice of assigning the applicable pricing for auctions versus order book pricing depending on how and when the order was submitted to the Exchange. Technical Amendments The Exchange proposes a few technical, non-substantive amendments throughout Options 7. First, the Exchange proposes to title paragraph (b) in Options 7, Section 1 as ‘‘Fee Disputes’’ and paragraph (c) as ‘‘Definitions’’ to more clearly identify the applicable rules within the Pricing Schedule. The Exchange also proposes to fix a typo in note 5 of Options 7, Section 3, Table 1. The Exchange further proposes to amend Table 2 of Options 7, Section 3 by specifying that regular Responses to PIM Orders are subject to separate 21 See PO 00000 supra note 20. Frm 00159 Fmt 4703 Sfmt 4703 67383 pricing in Part A of Section 3.22 As discussed above, PIM pricing is set forth separately in Options 7, Section 3.A. However, Crossing Orders and Responses to Crossing Orders are defined to cover PIM Orders and Responses to PIM Orders.23 The Exchange therefore believes that the proposed change will avoid potential confusion by market participants and investors in how Responses to PIM Orders are assessed. The Exchange notes that it already specifies in note 1 of Options 7, Section 3, Table 2 that regular PIM Orders are subject to separate pricing in Part A of Section 3. Lastly, the Exchange proposes to fix a punctuation error in note 1 of Options 7, Section 3, Table 2. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,24 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,25 in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Further the proposal is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. Unrelated Interest The Exchange believes that its proposal to specify how the Exchange currently prices unrelated market or marketable interest received is consistent with the Act because memorializing these concepts in new paragraph (d) of Options 7, Section 1 will promote greater clarity and transparency in the rules and make the Pricing Schedule easier to navigate for market participants. As discussed above, the Exchange already denotes how unrelated market or marketable interest received during a FAC, SOL, and PIM auction is priced by grouping such interest as Responses to Crossing Orders and Responses to PIM Orders today. How the Exchange prices unrelated market or marketable interest received prior to a FAC, SOL, and PIM auction, however, is not currently 22 See proposed note 2 of Options 7, Section 3, Table 2. 23 See supra notes 6 and 7. 24 15 U.S.C. 78f(b). 25 15 U.S.C. 78f(b)(4) and (5). E:\FR\FM\29SEN1.SGM 29SEN1 67384 Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 detailed in the Exchange’s Pricing Schedule. As such, the Exchange believes that by consolidating and describing these concepts in one place in the Pricing Schedule, Members can more easily locate the related rules and avoid any potential investor confusion. As discussed above, the Exchange will memorialize that it will assess book pricing for unrelated market or marketable interest received prior to the commencement of a FAC, SOL, or PIM auction by stating that such interest would be assessed the applicable maker pricing (for regular interest) and applicable Complex Order fees (for complex interest).26 The FAC, SOL and PIM Order that such interest executes against would be assessed applicable taker pricing (for regular FAC, SOL, and PIM Orders) and applicable Complex Order fees (for complex FAC, SOL, and PIM Orders).27 The Exchange applies order book pricing in this scenario because at the time the unrelated market or marketable interest was submitted and posted to the order book, Members would not have been aware of an ongoing FAC/SOL/PIM auction and therefore would not expect to be subject to Responses to Crossing Order fees in Section 3, Table 2 and Responses to PIM Order fees in Section 3.A.28 In contrast, the Exchange applies Responses to Crossing Order fees in Section 3, Table 2 and Responses to PIM Order fees in Section 3.A 29 to the unrelated market or marketable interest when it arrives during the FAC/SOL/PIM auction because Members submitting interest to the order book at that time would be aware that they may be allocated in the FAC/SOL/PIM auction.30 Additionally, the Exchange’s pricing models for the regular/complex order book and FAC/ SOL/PIM auctions each seek to attract liquidity to the Exchange and reward Members differently for different types of order flow. To this end, the Exchange’s pricing considers the manner in which interest interacts with the FAC/SOL/PIM auction based on the timing of when such interest entered which order book. The Exchange’s pricing is consistent with its current practice of assigning the applicable pricing for auctions versus order book pricing depending on how and when 26 As discussed above, the Exchange currently assesses uniform complex fees for similarly situated market participants, regardless of maker/taker. See Options 7, Section 4. 27 Id. 28 See supra note 20. 29 See supra note 12 for discussion of complex FAC/SOL/PIM response fees. 30 See supra note 20. VerDate Sep<11>2014 21:46 Sep 28, 2023 Jkt 259001 the order was submitted to the Exchange. Further, the Exchange’s proposal to memorialize current practice that unrelated market or marketable interest received prior to the commencement of a FAC/SOL/PIM auction would be assessed the applicable maker pricing (for regular interest) and applicable Complex Order fees (for complex interest) 31 is reasonable, equitable, and not unfairly discriminatory because all Members who submitted such interest that posted to the order book prior to the commencement of the auction (and executes against the FAC/SOL/PIM Order) would be uniformly assessed the same pricing as any other Member who posted liquidity on the order book. Further, all Members who submitted a FAC/SOL/PIM Order that executed against such interest would be uniformly assessed the same pricing as any other Member who removed liquidity from the order book. Similarly, the Exchange believes that its proposal to specify current practice that unrelated market or marketable interest received during a FAC/SOL/ PIM auction would be assessed the applicable Crossing Order pricing as described above is reasonable, equitable, and not unfairly discriminatory because all Members who submitted such interest would be uniformly assessed the same pricing as any other Member who submitted responses into the FAC/ SOL/PIM auction. Technical Amendments The Exchange believes that adding titles to paragraphs (b) and (c) of Options 7, Section 1 is consistent with the Act because they will promote clarity so that market participants can more easily locate the relevant rules in the Pricing Schedule. The Exchange likewise believes that fixing the typo in note 5 of Options 7, Section 3, Table 1 and punctuation error in note 1 of Options 7, Section 3, Table 2 will promote clarity in the rules and avoid any potential investor confusion. Similarly, the Exchange believes that specifying in proposed note 2 of Options 7, Section 3, Table 2 that regular Responses to PIM Orders are subject to separate pricing in Part A of Section 3 will avoid any potential investor confusion. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose 31 As discussed above, the Exchange currently assesses uniform complex fees for similarly situated market participants, regardless of maker/taker. See Options 7, Section 4. PO 00000 Frm 00160 Fmt 4703 Sfmt 4703 any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that its proposal would impose an undue burden on intra-market competition. The pricing of unrelated interest in the manner described above uniformly treats similarly situated market participants. Specifically, all Members who submitted unrelated market or marketable interest that posted to the order book prior to the commencement of the auction (and executes against the FAC/SOL/PIM Order) would be uniformly assessed the same pricing as any other Member who posted liquidity on the order book. All Members who submitted a FAC/SOL/PIM Order that executed against such interest would be uniformly assessed the same pricing as any other Member who removed liquidity from the order book. Additionally, all Members who submitted unrelated market or marketable interest to the order book during the FAC/SOL/PIM auction (which ends up participating and executing against the auction order) would be uniformly assessed the same pricing as any other Member who submitted responses into the FAC/SOL/ PIM auction. In terms of inter-market competition, the Exchange continues to believe that the way that it prices unrelated market or marketable interest remains competitive with other options markets given that the Exchange’s current pricing models for the regular and complex order books and for FAC/SOL/ PIM auctions are all designed to attract order flow to the Exchange. The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. E:\FR\FM\29SEN1.SGM 29SEN1 Federal Register / Vol. 88, No. 188 / Friday, September 29, 2023 / Notices III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.32 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– MRX–2023–17 on the subject line. lotter on DSK11XQN23PROD with NOTICES1 Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–MRX–2023–17. 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–MRX–2023–17 and should be submitted on or before October 20, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–21343 Filed 9–28–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [SEC File No. 270–423, OMB Control No. 3235–0472] complying with the collection of information requirement for a total burden of approximately 3,500 hours per year in the aggregate. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following website: www.reginfo.gov. Find this particular information collection by selecting ‘‘Currently under 30-day Review—Open for Public Comments’’ or by using the search function. Written comments and recommendations for the proposed information collection should be sent by October 30, 2023 to (i) www.reginfo.gov/ public/do/PRAMain and (ii) David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549, or by sending an email to: PRA_Mailbox@ sec.gov. Dated: September 26, 2023. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–21428 Filed 9–28–23; 8:45 am] Submission for OMB Review; Comment Request; Extension: Rule 15c1–6 Upon Written Request, Copies Available From: U.S. Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549–2736 Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget (‘‘OMB’’) a request for approval of extension of the existing collection of information provided for in Rule 15c1– 6 (17 CFR 240.15c1–6) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). Rule 15c1–6 states that any brokerdealer trying to sell to or buy from a customer a security in a primary or secondary distribution in which the broker-dealer is participating or is otherwise financially interested must give the customer written notification of the broker-dealer’s participation or interest at or before completion of the transaction. The Commission estimates that approximately 350 respondents will collect information annually under Rule 15c1–6 and that each respondent will spend approximately 10 hours annually BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–98516; File No. SR–MIAX– 2023–34] Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Provide Eligible Members Another Opportunity To Elect To Participate in the Maintaining Qualifications Program September 25, 2023. Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 18, 2023, Miami International Securities Exchange LLC (‘‘MIAX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) a proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 32 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 21:46 Sep 28, 2023 33 17 Jkt 259001 67385 PO 00000 CFR 200.30–3(a)(12). Frm 00161 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\29SEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 29SEN1

Agencies

[Federal Register Volume 88, Number 188 (Friday, September 29, 2023)]
[Notices]
[Pages 67381-67385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21343]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98504; File No. SR-MRX-2023-17]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Pricing Schedule at Options 7 To Specify Pricing Related to Unrelated 
Market or Marketable Interest

September 25, 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 September 14, 2023, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \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 proposes to amend its Pricing Schedule at Options 7 to 
specify pricing related to unrelated market or marketable interest.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Exchange's Pricing Schedule at 
Options 7 to specify pricing related to unrelated market or marketable 
interest. Specifically, the Exchange proposes to specify the current 
manner in which the Exchange assesses fees and rebates with respect to 
unrelated market or marketable interest received prior to the 
commencement of an auction in the Facilitation Mechanism (``FAC''),\3\ 
Solicited Order Mechanism (``SOL''),\4\ and Price Improvement Mechanism 
(``PIM''),\5\ and during such auctions. In addition, the Exchange also 
proposes a number of non-substantive amendments to Options 7 that will 
bring more clarity to the Exchange's Pricing Schedule. Each change is 
discussed below.
---------------------------------------------------------------------------

    \3\ The Facilitation Mechanism is a process by which an 
Electronic Access Member can execute a transaction wherein the 
Electronic Access Member seeks to facilitate a block-size order it 
represents as agent, and/or a transaction wherein the Electronic 
Access Member solicited interest to execute against a block-size 
order it represents as agent. Electronic Access Members must be 
willing to execute the entire size of orders entered into the 
Facilitation Mechanism. See Options 3, Section 11(b). Additionally, 
Electronic Access Members may use the Facilitation Mechanism to 
execute block-size Complex Orders at a net price. See Options 3, 
Section 11(c) for the rules governing complex Facilitation 
Mechanism.
    \4\ The Solicited Order Mechanism is a process by which an 
Electronic Access Member can attempt to execute orders of 500 or 
more contracts it represents as agent (the ``Agency Order'') against 
contra orders that it solicited. Each order entered into the 
Solicited Order Mechanism shall be designated as all-or-none. See 
Options 3, Section 11(d). Additionally, Electronic Access Members 
may use the Solicited Order Mechanism to execute Complex Orders at a 
net price. See Options 3, Section 11(e) for the rules governing 
complex Solicited Order Mechanism.
    \5\ The Price Improvement Mechanism is a process by which an 
Electronic Access Member can provide price improvement opportunities 
for a transaction wherein the Electronic Access Member seeks to 
facilitate an order it represents as agent, and/or a transaction 
wherein the Electronic Access Member solicited interest to execute 
against an order it represents as agent. See Options 3, Section 13. 
Additionally, Electronic Access Members may use the Price 
Improvement Mechanism to execute Complex Orders at a net price. See 
Options 3, Section 13(e) for the rules governing complex Price 
Improvement Mechanism.

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[[Page 67382]]

Unrelated Interest
    As a general rule, today, if an order executed in FAC (``FAC 
Order''), SOL (``SOL Order''), or PIM (``PIM Order'') executes against 
unrelated market or marketable interest received during an auction, the 
Exchange would assess the applicable Crossing Order \6\ pricing in 
Section 3, Table 2 and Section 3.A of its Pricing Schedule. If the FAC, 
SOL, or PIM Order executes against unrelated market or marketable 
interest received prior to an auction, the Exchange would assess 
applicable order book pricing in its Pricing Schedule. As discussed 
below, the Exchange applies these concepts to unrelated market or 
marketable interest in line with Member expectations and to treat 
similarly situated Members in a uniform manner. The Exchange notes that 
it currently denotes in the Pricing Schedule that it would apply 
separate Crossing Order pricing for any contra-side interest submitted 
after the commencement of an auction in FAC, SOL, or PIM (which 
includes unrelated market and marketable interest received during the 
auction) by grouping such interest as Responses to Crossing Orders.\7\ 
The Exchange further notes that today, it specifies throughout Options 
7 how it will price Responses to Crossing Orders.\8\ While the Exchange 
has delineated the treatment of unrelated market and marketable 
interest received by the Exchange during a FAC, SOL, and PIM auction in 
its Pricing Schedule, the Exchange believes that further clarity would 
be beneficial to Members as to how the Exchange currently assesses 
pricing for such interest received prior to the commencement of the 
auction. As such, the Exchange proposes to memorialize these concepts 
in its Pricing Schedule by adding new paragraph (d) to Options 7, 
Section 1, titled ``Unrelated Market or Marketable Interest Pricing.'' 
Proposed paragraph (d) would state that the following concepts would 
apply to FAC, SOL, and PIM Orders.
---------------------------------------------------------------------------

    \6\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism (``PIM'') or submitted as a Qualified Contingent Cross 
order. For purposes of this Pricing Schedule, orders executed in the 
Block Order Mechanism are also considered Crossing Orders.
    \7\ ``Responses to Crossing Order'' is any contra-side interest 
(i.e., orders & quotes) submitted after the commencement of an 
auction in the Exchange's Facilitation Mechanism, Solicited Order 
Mechanism, Block Order Mechanism or Price Improvement Mechanism. 
Contra-side interest in this context therefore includes both contra-
side interest submitted specifically in response to an auction 
notification, and unrelated market and marketable contra-side 
interest submitted to the order book during the auction.
    \8\ See Section 3, Table 2 (setting forth regular order fees for 
Responses to Crossing Orders except PIM Orders); Section 3.A 
(setting forth regular and complex order fees for Responses to PIM 
Orders) and Section 4 (setting forth complex order fees for 
Responses to Crossing Orders except PIM Orders).
---------------------------------------------------------------------------

    Specifically, under proposed new paragraph (d), when the FAC Order 
or SOL Order executes against unrelated market or marketable interest 
received during an auction, the FAC Order or SOL Order will be assessed 
the applicable Fee for Crossing Orders in Options 7, Section 3, Table 2 
(for regular FAC Orders and SOL Orders) \9\ and applicable Complex 
Order fees in Options 7, Section 4 (for complex FAC Orders and SOL 
Orders).\10\ The unrelated market or marketable interest received 
during an auction will be assessed the applicable fees for Responses to 
Crossing Order in Options 7, Section 3, Table 2 (for regular interest) 
\11\ and applicable Complex Order fees in Options 7, Section 4 (for 
complex interest).\12\
---------------------------------------------------------------------------

    \9\ Thus the regular FAC and SOL Order would be assessed the 
current regular Penny and Non-Penny Symbol fee for Crossing Orders 
as follows: $0.20 per contract for a Market Maker, Non-Nasdaq MRX 
Market Maker (FarMM), Firm Proprietary/Broker-Dealer, and 
Professional Customer, and $0.00 per contract for a Priority 
Customer.
    \10\ Thus the complex FAC and SOL Order would be assessed the 
current complex Penny Symbol fee of $0.35 per contract and complex 
Non-Penny Symbol fee of $0.85 per contract for all market 
participants except Priority Customers, which do not get assessed a 
complex fee.
    \11\ Thus, unrelated interest would be assessed the current 
regular Penny Symbol fee for Responses to Crossing Orders of $0.50 
per contract for all market participants. Further, they would be 
assessed the current regular Non-Penny Symbol fee for Responses to 
Crossing Orders of $1.10 per contract for all market participants.
    \12\ As stated in Options 7, Section 4, the complex order fees 
apply to responses to complex FAC and SOL Orders, except complex PIM 
Orders, which are subject to separate PIM response fees in Options 
7, Section 3.A. Thus, unrelated interest would be assessed the 
current complex Penny Symbol fee of $0.35 per contract and complex 
Non-Penny Symbol fee of $0.85 per contract for all market 
participants except Priority Customers, which do not get assessed a 
complex fee.
---------------------------------------------------------------------------

    When the order executed in PIM (``PIM Order'') executes against 
unrelated market or marketable interest received during an auction, the 
PIM Order will be assessed the applicable PIM Originating Order fees 
\13\ or Break-up Rebates \14\ in Options 7, Section 3.A (for regular 
and complex PIM Orders). The unrelated market or marketable interest 
received during an auction will be assessed the applicable fees for 
Responses to PIM Orders in Options 7, Section 3.A (for regular and 
complex interest).\15\
---------------------------------------------------------------------------

    \13\ Thus both regular and complex PIM Orders would be assessed 
the current Penny and Non-Penny Symbol PIM pricing as follows: $0.20 
PIM originating order fee for all market participants except 
Priority Customers, who do not get assessed this fee, and $0.02 PIM 
contra-side order fee for all market participants.
    \14\ Break-up Rebates only apply to regular PIM Orders of 500 or 
fewer contracts and to complex PIM Orders where the largest leg is 
500 or fewer contracts, and are provided for an originating Priority 
Customer PIM Order that executes with any response (order or quote) 
other than the PIM contra-side order. The Penny Symbol Break-up 
Rebate is currently $0.25 per contract for a Priority Customer 
originating PIM Order. The Non-Penny Symbol Break-up Rebate is 
currently $0.60 per contract for a Priority Customer originating PIM 
Order.
    \15\ Thus, unrelated interest would be assessed the current 
regular and complex Penny Symbol fee for Responses to PIM Orders of 
$0.50 per contract for all market participants. Further, they would 
be assessed the current regular and complex Non-Penny Symbol fee for 
Responses to PIM Orders of $1.10 per contract for all market 
participants.
---------------------------------------------------------------------------

    In contrast, today, when the FAC Order, SOL Order, or PIM Order 
executes against unrelated market or marketable interest received prior 
to the commencement of an auction, the FAC Order, SOL Order, or PIM 
Order would be subject to the applicable taker pricing in Options 7, 
Section 3, Table 1 (for regular FAC Orders, SOL Orders, and PIM Orders) 
\16\ and the applicable Complex Order fees in Options 7, Section 4 (for 
complex FAC Orders, SOL Orders, and PIM Orders).\17\ The unrelated 
market or marketable interest received prior to the commencement of an 
auction will be assessed the applicable maker pricing in Options 7, 
Section 3, Table 1 (for regular interest),\18\ and the applicable 
Complex

[[Page 67383]]

Order fees in Options 7, Section 4 (for complex interest).\19\
---------------------------------------------------------------------------

    \16\ Thus the regular FAC, SOL, and PIM Order would be assessed 
the current regular Penny Symbol Taker Fees as follows: $0.50 per 
contract for a Market Maker, Non-Nasdaq MRX Market Maker (FarMM), 
Firm Proprietary/Broker-Dealer, and Professional Customer 
(regardless of tier achieved), $0.15 per contract for a Priority 
Customer (Tiers 1-3), and $0.10 per contract for a Priority Customer 
(Tier 4). Further, they would be assessed the following regular Non-
Penny Taker Fees: $1.10 per contract for a Market Maker, Non-Nasdaq 
MRX Market Maker (FarMM), Firm Proprietary/Broker-Dealer, and 
Professional Customer (regardless of tier achieved), $0.35 per 
contract for a Priority Customer (Tier 1), $0.25 per contract for a 
Priority Customer (Tier 2), $0.15 per contract for a Priority 
Customer (Tier 3), and $0.10 per contract for a Priority Customer 
(Tier 4).
    \17\ Thus the complex FAC, SOL, and PIM Order would be assessed 
the current complex Penny Symbol fee of $0.35 per contract and 
complex Non-Penny Symbol fee of $0.85 per contract for all market 
participants except Priority Customers, which do not get assessed a 
complex fee.
    \18\ Thus, unrelated interest would be assessed the current 
regular Penny Symbol Maker Fees/Rebates as follows: $0.10 per 
contract fee for a Market Maker (Tier 1), $0.00 per contract fee for 
a Market Maker (Tier 2), $0.05 per contract rebate for a Market 
Maker (Tier 3), $0.10 per contract rebate for a Market Maker (Tier 
4), $0.47 per contract fee for a Non-Nasdaq MRX Market Maker 
(FarMM), Firm Proprietary/Broker-Dealer, and Professional Customer 
(regardless of tier achieved), and $0.00 per contract fee for a 
Priority Customer (regardless of tier achieved). Further, they would 
be assessed the following regular Non-Penny Maker Fees: $0.35 per 
contract for a Market Maker (Tier 1), $0.20 per contract for a 
Market Maker (Tier 2), $0.15 per contract for a Market Maker (Tier 
3), $0.10 per contract for a Market Maker (Tier 4), $0.90 per 
contract for a Non-Nasdaq MRX Market Maker (FarMM), Firm 
Proprietary/Broker-Dealer, and Professional Customer (regardless of 
tier achieved), and $0.00 per contract for a Priority Customer 
(regardless of tier achieved).
    \19\ Thus, unrelated interest would be assessed the current 
complex Penny Symbol fee of $0.35 per contract and complex Non-Penny 
Symbol fee of $0.85 per contract for all market participants except 
Priority Customers, which do not get assessed a complex fee.
---------------------------------------------------------------------------

    Unrelated market or marketable interest resting on the Exchange's 
order book, whether received prior to the commencement of a FAC, SOL, 
or PIM auction or during such auction, would be allocated in accordance 
with Options 3, Section 11(b)(4) and (c)(7) (for regular and complex 
FAC), Section 11(d)(3) and (e)(4) (for regular and complex SOL), and 
Section 13(d) and (e)(5) (for regular and complex PIM).
    The Exchange applies order book pricing in accordance with Options 
7, Sections 3 and 4 to interest received prior to a FAC, SOL, and PIM 
auction that subsequently trades with a FAC, SOL, or PIM Order (which 
is considered unrelated market or marketable interest for purposes of 
the auction) because the Exchange seeks to treat the Member who 
submitted such interest in a similar manner as any other Member who 
submits interest to the order book. The Member that submitted such 
interest would not have been aware at the time that a FAC, SOL, or PIM 
auction was in progress, and therefore would not have expected to be 
assessed separate Crossing Order pricing.\20\ In such instances, for 
regular interest, the unrelated market or marketable interest that 
posted to the order book prior to the commencement of the auction would 
be treated as posting liquidity to the order book (makers of liquidity) 
and assessed maker pricing in accordance with Options 7, Section 3, 
Table 1. The FAC, SOL, and PIM Order that trades against the unrelated 
interest would be considered as removing liquidity from the order book 
(takers of liquidity) and assessed taker pricing in accordance with 
Options 7, Section 3, Table 1. This is consistent with taker pricing 
assessed to any Member that removes liquidity from the order book. For 
complex interest, the Exchange currently assesses uniform complex order 
fees for similarly situated market participants as set forth in Options 
7, Section 4, regardless of maker/taker. As such, both the unrelated 
market or marketable interest that posted to the complex order book 
prior to the commencement of the complex FAC/SOL/PIM auction and the 
complex FAC/SOL/PIM Order would be assessed the applicable complex 
order fee, consistent with any complex order submitted to the complex 
order book.
---------------------------------------------------------------------------

    \20\ Members become aware of ongoing FAC, SOL, and PIM auctions 
as the Exchange disseminates an auction notification in the form of 
a ``broadcast message'' when the Exchange receives a FAC, SOL, and 
PIM Order for auction processing. The broadcast message is sent by 
the Exchange to all Members and includes the series, price, side, 
and size of the Agency Order. See Options 3, Sections 11(b)(2), 
11(d)(2), and 13(c).
---------------------------------------------------------------------------

    In contrast, the Exchange applies Crossing Order pricing in Options 
7, Sections 3 and 4 to the unrelated market or marketable interest when 
the interest arrived during a FAC, SOL, and PIM auction. Members 
submitting interest to the order book during one of these auctions are 
aware that they may be allocated in the auction.\21\ The Exchange 
assesses the applicable response fee in Options 7, Section 3 and 
Section 4 to Members submitting such interest in the same manner that 
responders to the FAC, SOL, and PIM auction are assessed fees for their 
auction responses. In other words, the unrelated market or marketable 
interest that received an allocation within the FAC, SOL, or PIM 
auction would be uniformly subject to the same fees as those Members 
that submitted auction responses and were allocated.
---------------------------------------------------------------------------

    \21\ See supra note 20.
---------------------------------------------------------------------------

    The Exchange's pricing models for the regular/complex order book 
and FAC/SOL/PIM auctions each seek to attract liquidity to the Exchange 
and reward Members differently for the different types of order flow. 
To this end, the Exchange's pricing considers the manner in which 
orders interact with the FAC/SOL/PIM auction based on the timing of 
when the order entered which order book. The Exchange's pricing is 
consistent with its current practice of assigning the applicable 
pricing for auctions versus order book pricing depending on how and 
when the order was submitted to the Exchange.
Technical Amendments
    The Exchange proposes a few technical, non-substantive amendments 
throughout Options 7. First, the Exchange proposes to title paragraph 
(b) in Options 7, Section 1 as ``Fee Disputes'' and paragraph (c) as 
``Definitions'' to more clearly identify the applicable rules within 
the Pricing Schedule. The Exchange also proposes to fix a typo in note 
5 of Options 7, Section 3, Table 1.
    The Exchange further proposes to amend Table 2 of Options 7, 
Section 3 by specifying that regular Responses to PIM Orders are 
subject to separate pricing in Part A of Section 3.\22\ As discussed 
above, PIM pricing is set forth separately in Options 7, Section 3.A. 
However, Crossing Orders and Responses to Crossing Orders are defined 
to cover PIM Orders and Responses to PIM Orders.\23\ The Exchange 
therefore believes that the proposed change will avoid potential 
confusion by market participants and investors in how Responses to PIM 
Orders are assessed. The Exchange notes that it already specifies in 
note 1 of Options 7, Section 3, Table 2 that regular PIM Orders are 
subject to separate pricing in Part A of Section 3. Lastly, the 
Exchange proposes to fix a punctuation error in note 1 of Options 7, 
Section 3, Table 2.
---------------------------------------------------------------------------

    \22\ See proposed note 2 of Options 7, Section 3, Table 2.
    \23\ See supra notes 6 and 7.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\24\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\25\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. Further the proposal is 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Unrelated Interest
    The Exchange believes that its proposal to specify how the Exchange 
currently prices unrelated market or marketable interest received is 
consistent with the Act because memorializing these concepts in new 
paragraph (d) of Options 7, Section 1 will promote greater clarity and 
transparency in the rules and make the Pricing Schedule easier to 
navigate for market participants. As discussed above, the Exchange 
already denotes how unrelated market or marketable interest received 
during a FAC, SOL, and PIM auction is priced by grouping such interest 
as Responses to Crossing Orders and Responses to PIM Orders today. How 
the Exchange prices unrelated market or marketable interest received 
prior to a FAC, SOL, and PIM auction, however, is not currently

[[Page 67384]]

detailed in the Exchange's Pricing Schedule. As such, the Exchange 
believes that by consolidating and describing these concepts in one 
place in the Pricing Schedule, Members can more easily locate the 
related rules and avoid any potential investor confusion.
    As discussed above, the Exchange will memorialize that it will 
assess book pricing for unrelated market or marketable interest 
received prior to the commencement of a FAC, SOL, or PIM auction by 
stating that such interest would be assessed the applicable maker 
pricing (for regular interest) and applicable Complex Order fees (for 
complex interest).\26\ The FAC, SOL and PIM Order that such interest 
executes against would be assessed applicable taker pricing (for 
regular FAC, SOL, and PIM Orders) and applicable Complex Order fees 
(for complex FAC, SOL, and PIM Orders).\27\ The Exchange applies order 
book pricing in this scenario because at the time the unrelated market 
or marketable interest was submitted and posted to the order book, 
Members would not have been aware of an ongoing FAC/SOL/PIM auction and 
therefore would not expect to be subject to Responses to Crossing Order 
fees in Section 3, Table 2 and Responses to PIM Order fees in Section 
3.A.\28\ In contrast, the Exchange applies Responses to Crossing Order 
fees in Section 3, Table 2 and Responses to PIM Order fees in Section 
3.A \29\ to the unrelated market or marketable interest when it arrives 
during the FAC/SOL/PIM auction because Members submitting interest to 
the order book at that time would be aware that they may be allocated 
in the FAC/SOL/PIM auction.\30\ Additionally, the Exchange's pricing 
models for the regular/complex order book and FAC/SOL/PIM auctions each 
seek to attract liquidity to the Exchange and reward Members 
differently for different types of order flow. To this end, the 
Exchange's pricing considers the manner in which interest interacts 
with the FAC/SOL/PIM auction based on the timing of when such interest 
entered which order book. The Exchange's pricing is consistent with its 
current practice of assigning the applicable pricing for auctions 
versus order book pricing depending on how and when the order was 
submitted to the Exchange.
---------------------------------------------------------------------------

    \26\ As discussed above, the Exchange currently assesses uniform 
complex fees for similarly situated market participants, regardless 
of maker/taker. See Options 7, Section 4.
    \27\ Id.
    \28\ See supra note 20.
    \29\ See supra note 12 for discussion of complex FAC/SOL/PIM 
response fees.
    \30\ See supra note 20.
---------------------------------------------------------------------------

    Further, the Exchange's proposal to memorialize current practice 
that unrelated market or marketable interest received prior to the 
commencement of a FAC/SOL/PIM auction would be assessed the applicable 
maker pricing (for regular interest) and applicable Complex Order fees 
(for complex interest) \31\ is reasonable, equitable, and not unfairly 
discriminatory because all Members who submitted such interest that 
posted to the order book prior to the commencement of the auction (and 
executes against the FAC/SOL/PIM Order) would be uniformly assessed the 
same pricing as any other Member who posted liquidity on the order 
book. Further, all Members who submitted a FAC/SOL/PIM Order that 
executed against such interest would be uniformly assessed the same 
pricing as any other Member who removed liquidity from the order book.
---------------------------------------------------------------------------

    \31\ As discussed above, the Exchange currently assesses uniform 
complex fees for similarly situated market participants, regardless 
of maker/taker. See Options 7, Section 4.
---------------------------------------------------------------------------

    Similarly, the Exchange believes that its proposal to specify 
current practice that unrelated market or marketable interest received 
during a FAC/SOL/PIM auction would be assessed the applicable Crossing 
Order pricing as described above is reasonable, equitable, and not 
unfairly discriminatory because all Members who submitted such interest 
would be uniformly assessed the same pricing as any other Member who 
submitted responses into the FAC/SOL/PIM auction.
Technical Amendments
    The Exchange believes that adding titles to paragraphs (b) and (c) 
of Options 7, Section 1 is consistent with the Act because they will 
promote clarity so that market participants can more easily locate the 
relevant rules in the Pricing Schedule. The Exchange likewise believes 
that fixing the typo in note 5 of Options 7, Section 3, Table 1 and 
punctuation error in note 1 of Options 7, Section 3, Table 2 will 
promote clarity in the rules and avoid any potential investor 
confusion. Similarly, the Exchange believes that specifying in proposed 
note 2 of Options 7, Section 3, Table 2 that regular Responses to PIM 
Orders are subject to separate pricing in Part A of Section 3 will 
avoid any potential investor confusion.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    The Exchange does not believe that its proposal would impose an 
undue burden on intra-market competition. The pricing of unrelated 
interest in the manner described above uniformly treats similarly 
situated market participants. Specifically, all Members who submitted 
unrelated market or marketable interest that posted to the order book 
prior to the commencement of the auction (and executes against the FAC/
SOL/PIM Order) would be uniformly assessed the same pricing as any 
other Member who posted liquidity on the order book. All Members who 
submitted a FAC/SOL/PIM Order that executed against such interest would 
be uniformly assessed the same pricing as any other Member who removed 
liquidity from the order book. Additionally, all Members who submitted 
unrelated market or marketable interest to the order book during the 
FAC/SOL/PIM auction (which ends up participating and executing against 
the auction order) would be uniformly assessed the same pricing as any 
other Member who submitted responses into the FAC/SOL/PIM auction.
    In terms of inter-market competition, the Exchange continues to 
believe that the way that it prices unrelated market or marketable 
interest remains competitive with other options markets given that the 
Exchange's current pricing models for the regular and complex order 
books and for FAC/SOL/PIM auctions are all designed to attract order 
flow to the Exchange. The Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges. Because 
competitors are free to modify their own fees in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.

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

    No written comments were either solicited or received.

[[Page 67385]]

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.\32\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is: (i) necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) otherwise in 
furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \32\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MRX-2023-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-MRX-2023-17. 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-MRX-2023-17 and should be 
submitted on or before October 20, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
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    \33\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21343 Filed 9-28-23; 8:45 am]
BILLING CODE 8011-01-P
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