Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule, 11326-11331 [2024-02980]

Download as PDF 11326 Federal Register / Vol. 89, No. 31 / Wednesday, February 14, 2024 / Notices For the same reasons, the Exchange believes that the proposed changes are designed to provide a fair procedure for the disciplining of members and persons associated with members, consistent with Sections 6(b)(7) and 6(d) of the Act.33 The Exchange believes that the proposed rule change provides a fair procedure by allowing hearings to proceed by video conference not only due to public health or safety reasons, but also at a party or the parties’ request for reasons particular to them. The Chief or Deputy Chief Hearing Officer could allow a hearing to proceed by video conference in the exercise of reasonable discretion and subject to procedural safeguards that ensure fairness, including the requirement that any motions be joined by all parties and show good cause. Overall, the proposed rule change represents a significant step toward modernizing disciplinary process procedures in a manner that preserves in-person hearings but allows for the use of video conference technology under certain circumstances. 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 that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is not intended to address competitive issues but is rather intended solely to create permanent rules that would allow video conference hearings if OHO determines that proceeding in person may endanger the health or safety of the participants or would be impracticable, or where both parties prefer doing so and show good cause, thereby providing greater harmonization with approved FINRA rules. ddrumheller on DSK120RN23PROD with NOTICES1 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 34 and Rule 19b–4(f)(6) thereunder.35 Because the proposed rule change does not: (i) significantly affect the protection of U.S.C. 78f(b)(7) and 78f(d). U.S.C. 78s(b)(3)(A)(iii). 35 17 CFR 240.19b–4(f)(6). investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder. A proposed rule change filed under Rule 19b–4(f)(6) 36 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b4(f)(6)(iii),37 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. At any time within 60 days of the filing of such 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 under Section 19(b)(2)(B) 38 of the Act to determine whether the proposed rule change 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– NYSECHX–2024–04 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–NYSECHX–2024–04. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.39 Dated: February 8, 2024. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–02978 Filed 2–13–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99497; File No. SR–MEMX– 2024–02] Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange’s Fee Schedule Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on January 31, 2024, MEMX LLC (‘‘MEMX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The 33 15 36 17 39 17 34 15 37 17 1 15 VerDate Sep<11>2014 17:50 Feb 13, 2024 CFR 240.19b–4(f)(6). CFR 240.19b–4(f)(6)(iii). 38 15 U.S.C. 78s(b)(2)(B). 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–NYSECHX–2024–04 and should be submitted on or before March 6, 2024. Jkt 262001 PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. E:\FR\FM\14FEN1.SGM 14FEN1 Federal Register / Vol. 89, No. 31 / Wednesday, February 14, 2024 / Notices Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange is filing with the Commission a proposed rule change to amend the Exchange’s fee schedule applicable to Members 3 (the ‘‘Fee Schedule’’) pursuant to Exchange Rules 15.1(a) and (c). The Exchange proposes to implement the changes to the Fee Schedule pursuant to this proposal on February 1, 2024. The text of the proposed rule change is provided in Exhibit 5. 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 ddrumheller on DSK120RN23PROD with NOTICES1 The purpose of the proposed rule change is to amend the Fee Schedule to: (i) increase the rebate for executions of Retail Orders 4 in securities priced below $1.00 per share that add displayed liquidity to the Exchange (such orders, ‘‘Added Displayed SubDollar Retail Volume’’) and make a corresponding increase in the rebate provided for executions of Added Displayed Sub-dollar Retail Volume under Retail Tier 1; and (ii) modify NBBO Setter Tier 1 by adopting a new additive rebate for executions of added displayed volume (other than Retail Orders) that meet the criteria under NBBO Setter Tier 1 and modifying the 3 See Exchange Rule 1.5(p). ‘‘Retail Order’’ means an agency or riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a Retail Member Organization (‘‘RMO’’), provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. See Exchange Rule 11.21(a). 4A VerDate Sep<11>2014 17:50 Feb 13, 2024 Jkt 262001 required criteria under such tier, each as further described below. The Exchange first notes that it 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 only one of 16 registered equities exchanges, as well as a number of alternative trading systems and other off-exchange venues, to which market participants may direct their order flow. Based on publicly available information, no single registered equities exchange currently has more than approximately 15% of the total market share of executed volume of equities trading.5 Thus, in such a low-concentrated and highly competitive market, no single equities exchange possesses significant pricing power in the execution of order flow, and the Exchange currently represents approximately 3% of the overall market share.6 The Exchange in particular operates a ‘‘Maker-Taker’’ model whereby it provides rebates to Members that add liquidity to the Exchange and charges fees to Members that remove liquidity from the Exchange. The Fee Schedule sets forth the standard rebates and fees applied per share for orders that add and remove liquidity, respectively. Additionally, in response to the competitive environment, the Exchange also offers tiered pricing, which provides Members with opportunities to qualify for higher rebates or lower fees where certain volume criteria and thresholds are met. Tiered pricing provides an incremental incentive for Members to strive for higher tier levels, which provides increasingly higher benefits or discounts for satisfying increasingly more stringent criteria. Increase Rebate for Added Displayed Sub-Dollar Retail Volume Currently, the Exchange provides a rebate of 0.075% of the total dollar value of the transaction for executions of Retail Orders in securities priced below $1.00 per share that add displayed liquidity to the Exchange (such orders, ‘‘Added Displayed SubDollar Retail Volume’’). This rebate is applicable to all executions of Added Displayed Sub-Dollar Retail Volume and is applicable to all Members (including those that qualify for any of the Exchange’s volume tiers). Now, the 5 Market share percentage calculated as of January 30, 2024. The Exchange receives and processes data made available through consolidated data feeds (i.e., CTS and UTDF). 6 Id. PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 11327 Exchange proposes to increase the rebate provided to Members for all executions of Added Displayed SubDollar Retail Volume to 0.15% of the total dollar value of the transaction. The Exchange also currently offers Retail Tier 1, whereby the Exchange provides an enhanced rebate of $0.0034 per share for executions of Added Displayed Retail Volume in securities priced at or above $1.00 and 0.075% of the total dollar value of the transaction for executions of Added Displayed Retail Volume in securities priced below $1.00 for a Member that qualifies for Retail Tier 1 by achieving a Retail Order ADAV 7 that is equal to or great than 0.07% of the TCV.8 Given that the Exchange is now proposing to increase the rebate for all executions of Added Displayed Sub-dollar Retail Volume from 0.075% of the total dollar value of the transaction to 0.15% of the total dollar value of the transaction, it follows that the rebate provided under Retail Tier 1 for executions of Added Displayed Sub-Dollar Retail Volume should also be increased to 0.15% of the transaction. As such, the Exchange is similarly proposing to increase the rebate provided to Members that qualify for Retail Tier 1 to 0.15% of the total dollar value of the transaction for executions of Added Displayed SubDollar Retail Volume, which again, is the same rebate that will be applicable to such executions for all Members under this proposal.9 The purpose of increasing the rebate for executions of Added Displayed SubDollar Retail Volume is for business and competitive reasons, as the Exchange believes that increasing such rebate would incentivize Members to submit additional Added Displayed Sub-Dollar Retail Volume to the Exchange, which the Exchange believes would promote price discovery and price formation, provide more trading opportunities and tighter spreads, and deepen liquidity that is subject to the Exchange’s transparency, regulation and oversight, thereby enhancing market quality to the benefit of all Members and investors. 7 As set forth on the Fee Schedule, ‘‘ADAV’’ means the average daily added volume calculated as the number of shares added per day, which is calculated on a monthly basis, and ‘‘Displayed ADAV’’ means ADAV with respect to displayed orders. 8 As set forth on the Fee Schedule, ‘‘TCV’’ means total consolidated volume calculated as the volume reported by all exchanges and trade reporting facilities to a consolidated transaction reporting plan for the month for which the fees apply. 9 The pricing for the Retail Tier is referred to by the Exchange on the Fee Schedule under the description ‘‘Added displayed volume, Retail Tier 1’’ with a Fee Code of ‘‘Br1’’, ‘‘Dr1’’ or ‘‘Jr1’’, as applicable, to be provided by the Exchange on the monthly invoices provided to Members. E:\FR\FM\14FEN1.SGM 14FEN1 11328 Federal Register / Vol. 89, No. 31 / Wednesday, February 14, 2024 / Notices NBBO Setter Tier ddrumheller on DSK120RN23PROD with NOTICES1 The Exchange currently offers NBBO Setter Tier 1 under which a Member may receive an additive rebate of $0.0002 per share for executions of Added Displayed Volume (other than Retail Orders) that establish the NBBO (such orders, ‘‘Setter Volume’’) by achieving an ADAV with respect to orders with Fee Code B 10 that is equal to or greater than 0.10% of the TCV. The Exchange now proposes to modify NBBO Setter Tier 1 by adopting a new additive rebate under such tier that would apply to a qualifying Member’s executions of Added Displayed Volume (other than Retail Orders) that have a Fee Code of D or J, and modifying the required criteria under such tier. First, the Exchange proposes to adopt a new additive rebate under NBBO Setter Tier 1 of $0.0001 per share for a qualifying Member’s executions of Added Displayed Volume with a Fee Code of D or J.11 The Exchange is not proposing to modify the existing additive rebate of $0.0002 per share for a Member’s executions of Added Displayed Volume (other than Retail Orders) that establish the NBBO (i.e. Fee Code B), however, the Exchange is proposing to add language within the NBBO Setter Tier 1 pricing table that clarifies which Fee Codes would receive which Additive Rebate. Specifically, the Exchange will offer an additive rebate of $0.0002 per share for a qualifying Member’s executions of Added Displayed Volume with Fee Code B and an additive rebate of $0.0001 per share for a qualifying Member’s executions of Added Displayed Volume with Fee Codes D and J. To summarize, under the current proposal, if a Member meets the criteria under NBBO Setter Tier 1, that Member will now receive the current additive rebate of $0.0002 per share on all of its executions of Added Displayed Volume that establish the NBBO (i.e. Fee Code B), as well as a new additive rebate of $0.0001 per share on all of its executions of Added Displayed volume 10 The Exchange notes that orders with Fee Code B include orders, other than Retail Orders, that establish the NBBO. 11 The Exchange notes that orders with Fee Code D include orders that add displayed liquidity to the Exchange but that are not Fee Code B or J. Orders with Fee Code J include orders, other than Retail Orders, that establish a new BBO on the Exchange that matches the NBBO first established on an away market. Thus, orders with Fee Code B, D or J include all orders, other than Retail Orders, that add displayed liquidity to the Exchange. The pricing for NBBO Setter Tier 1 is referred to by the Exchange on the Fee Schedule under the description ‘‘NBBO Setter Tier 1’’ with a Fee Code of S1 to be appended to the otherwise applicable Fee Code assigned by the Exchange on the monthly invoices for qualifying executions. VerDate Sep<11>2014 17:50 Feb 13, 2024 Jkt 262001 that do not establish the NBBO (i.e. Fee Codes D and J).12 Second, the Exchange is proposing to modify the required criteria under NBBO Setter Tier 1. Currently, a Member qualifies for such tier by achieving an ADAV with respect to orders with a Fee Code B that is equal to or greater than 0.10% of the TCV. The Exchange proposes to keep this criteria intact and adopt an additional (i.e., alternative) criteria that a Member may achieve in order to qualify for such tier. Specifically, the Exchange proposes to modify the required criteria such that a Member would now qualify for such tier by achieving: (i) an ADAV with respect to Fee Code B that is equal to or greater than 0.10% of the TCV; or (ii) an ADAV with respect to orders with Fee Code B that is equal to or greater than 0.05% of the TCV and a Step-Up ADAV 13 with respect to orders with a Fee Code B that is equal to or greater than 75% of the Member’s December 2023 ADAV with respect to orders with a Fee Code B. Thus, such proposed change would add an alternative criteria that includes a lower overall Fee Code B ADAV threshold but that also requires a Member to increase its Fee Code B ADAV above its December 2023 ADAV by a specified threshold. Additionally, the Exchange is proposing that criteria (2) of NBBO Setter Tier 1 will expire no later than July 31, 2024, and the Exchange will indicate this in a note under the NBBO Setter Tier pricing table on the Fee Schedule. Again, the Exchange notes that it is not proposing to change the current additive rebate under NBBO Setter Tier 1 that is provided in addition to the otherwise applicable rebate for executions of added displayed volume (other than Retail Orders) in securities priced at or above $1.00 per share that establish the NBBO. The purpose of adopting a new additive rebate under the NBBO Setter Tier 1 that applies to a qualifying Member’s executions of Added Displayed Volume with Fee Codes D or J (in addition to Setter Volume) is, like the original purpose of the NBBO Setter Tier, to attract aggressively priced displayed liquidity to the Exchange, which the Exchange believes would 12 In connection with the proposed changes to this tier, the Exchange is proposing to revise the note under the NBBO Setter Tier pricing table to reflect that the additive rebate under such tier is applicable to executions of Added Displayed Volume (other than Retail Orders) in securities priced at or above $1.00 per share rather than being limited to the Fee Code associated with Setter Volume. 13 As set forth on the Fee Schedule, ‘‘Step-Up ADAV’’ means ADAV in the relevant baseline month subtracted from current ADAV. PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 enhance market quality by increasing execution opportunities, tightening spreads, and promoting price discovery on the Exchange. Additionally, the Exchange believes that the additive rebate for executions of Added Displayed Volume is commensurate with the corresponding required criteria under such tier and is reasonably related to such market quality benefits that such tier is designed to achieve. The Exchange believes that the proposed alternative criteria to NBBO Setter Tier 1 provides an incremental incentive for Members to strive for higher ADAV on the Exchange with respect to orders with a Fee Code B to receive the corresponding additive rebate for executions of Added Displayed Volume under such tier, and thus, it is designed to encourage Members that do not currently qualify for such tier to increase their aggressively priced, liquidity adding orders to the Exchange. The Exchange believes that the tier, as proposed, would further incentivize increased order flow to the Exchange, thereby contributing to a deeper and more liquid market to the benefit of all market participants. The Exchange notes that, as the proposed change to the required criteria under NBBO Setter Tier 1 merely provides an alternative criteria and does not change the existing criteria, the Exchange believes that such change would make the tier easier for Members to achieve, and, in turn, while the Exchange has no way of predicting with certainty how the proposed new criteria will impact Member activity, the Exchange expects that more Members will strive to qualify for such tier than currently do, resulting in the submission of additional order flow to the Exchange. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,14 in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,15 in particular, 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 permit unfair discrimination between customers, issuers, brokers, or dealers. As discussed above, the Exchange operates in a highly fragmented and 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 14 15 15 15 E:\FR\FM\14FEN1.SGM U.S.C. 78f. U.S.C. 78f(b)(4) and (5). 14FEN1 ddrumheller on DSK120RN23PROD with NOTICES1 Federal Register / Vol. 89, No. 31 / Wednesday, February 14, 2024 / Notices excessive or incentives to be insufficient, and the Exchange represents only a small percentage of the overall market. The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and also recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 16 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 to reduce use of certain categories of products, in response to new or different pricing structures being introduced into the market. Accordingly, competitive forces constrain the Exchange’s transaction fees and rebates, including with respect to Added Displayed Volume and SubDollar Retail Volume, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange believes the proposal reflects a reasonable and competitive pricing structure designed to incentivize market participants to direct additional order flow, including displayed, liquidity-adding, NBBO Setting and/or Retail orders, to the Exchange, which the Exchange believes would promote price discovery and enhance liquidity and market quality on the Exchange to the benefit of all Members and market participants. The Exchange believes that the proposed change to increase the rebate provided for all executions of Added Displayed Sub-Dollar Retail Volume, including those that meet the criteria under Retail Tier 1, is reasonable because it is designed to incentivize Members to submit additional displayed liquidity-adding Retail Orders to the Exchange, which would enhance liquidity on the Exchange and promote price discovery and price formation. The Exchange further believes the proposed increased rebate is reasonable and appropriate because it is comparable to and competitive with the rebates provided by other exchanges for executions of added displayed volume in Retail Orders in securities priced 16 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). VerDate Sep<11>2014 17:50 Feb 13, 2024 Jkt 262001 below $1.00 per share.17 The Exchange further believes the proposed rebate for executions of Added Displayed SubDollar Retail Volume is equitable and not unfairly discriminatory, as such rebate will apply equally to all Members submitting Retail Orders to the Exchange. The Exchange notes that volumebased incentives and discounts have been widely adopted by exchanges, including the Exchange, and are reasonable, equitable and not unfairly discriminatory because they are open to all members on an equal basis and provide additional benefits or discounts that are reasonably related to the value to an exchange’s market quality associated with higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns, and the introduction of higher volumes of orders into the price and volume discovery process. The Exchange believes that NBBO Setter Tier 1 as modified by the changes proposed herein is reasonable, equitable and not unfairly discriminatory for these same reasons, as such tier would provide Members with an incremental incentive to achieve certain volume thresholds on the Exchange, is available to all Members on an equal basis, and, as described above, is designed to encourage Members to maintain or increase their order flow, including in the form of displayed, liquidity-adding NBBO setting orders, to the Exchange in order to qualify for an additive rebate for executions of Added Displayed Volume, as applicable, thereby contributing to a deeper, more liquid and well balanced market ecosystem on the Exchange to the benefit of all Members and market participants. The Exchange also believes that such tier reflects a reasonable and equitable allocation of fees and rebates, as the Exchange believes that the additive rebate for executions of Added Displayed Volume under the proposed NBBO Setter Tier 1 remains commensurate with the corresponding required criteria under such tier and is reasonably related to the market quality benefits that such tier is designed to achieve, as described above. For the reasons discussed above, the Exchange submits that the proposal 17 See, e.g., the MIAX Pearl LLC equities trading fee schedule on its public website (available at: https://www.miaxglobal.com/markets/us-equities/ pearl-equities/fees) which reflects a standard rebate of 0.15% of the total dollar value of executions that add liquidity in displayed Retail Orders; and the NYSE Arca equities trading fee schedule (at: https:// www.nyse.com/publicdocs/nyse/markets/nyse-arca/ NYSE_Arca_Marketplace_Fees.pdf) which reflects a standard rebate of 0.05% of the total dollar value of executions in Retail Orders that add liquidity. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 11329 satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of the Act 18 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. As described more fully below in the Exchange’s statement regarding the burden on competition, the Exchange believes that its transaction pricing is subject to significant competitive forces, and that the proposed fees and rebates described herein are appropriate to address such forces. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposal will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the proposal is intended to incentivize market participants to direct additional order flow, including displayed, liquidityadding, NBBO setting and Retail orders, to the Exchange, thereby enhancing liquidity and market quality on the Exchange to the benefit of all Members and market participants, as well as to generate additional revenue in a manner that is still consistent with the Exchange’s overall pricing philosophy of encouraging added displayed liquidity. As a result, the Exchange believes the proposal would enhance its competitiveness as a market that attracts actionable orders, thereby making it a more desirable destination venue for its customers. For these reasons, the Exchange believes that the proposal furthers the Commission’s goal in adopting Regulation NMS of fostering competition among orders, which promotes ‘‘more efficient pricing of individual stocks for all types of orders, large and small.’’ 19 Intramarket Competition As discussed above, the Exchange believes that the proposal would incentivize Members to submit additional order flow, including displayed, liquidity-adding, aggressively priced displayed orders that establish the NBBO Setting, and/or Retail orders to the Exchange, thereby enhancing liquidity and market quality on the Exchange to the benefit of all Members, as well as enhancing the attractiveness of the Exchange as a trading venue, which the Exchange believes, in turn, 18 15 U.S.C. 78f(b)(4) and (5). supra note 16. 19 See E:\FR\FM\14FEN1.SGM 14FEN1 11330 Federal Register / Vol. 89, No. 31 / Wednesday, February 14, 2024 / Notices ddrumheller on DSK120RN23PROD with NOTICES1 would continue to encourage market participants to direct additional order flow to the Exchange. Greater liquidity benefits all Members by providing more trading opportunities and encourages Members to send additional orders to the Exchange, thereby contributing to robust levels of liquidity, which benefits all market participants. The Exchange does not believe that the proposed change to increase the rebate for all executions of Added Displayed Sub-Dollar Retail Volume, including those that meet the criteria under Retail Tier 1, would impose any burden on intramarket competition because such change will apply to all Members uniformly, in that the proposed rebate for such executions would be the rebate applicable to all Members. The opportunity to qualify for the proposed NBBO Setter Tier 1, and thus receive the proposed additive rebate for executions of Added Displayed Volume under such tier, would be available to all Members that meet the associated volume requirements in any month. For the foregoing reasons, the Exchange believes the proposed changes would not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Intermarket Competition As noted above, 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. Members have numerous alternative venues that they may participate on and direct their order flow to, including 15 other equities exchanges and numerous alternative trading systems and other off-exchange venues. As noted above, no single registered equities exchange currently has more than approximately 15% of the total market share of executed volume of equities trading. Thus, in such a low-concentrated and highly competitive market, no single equities exchange possesses significant pricing power in the execution of order flow. Moreover, 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 to reduce use of certain categories of products, in response to new or different pricing structures being introduced into the market. Accordingly, competitive forces constrain the Exchange’s transaction fees and rebates, including with respect to Added Displayed Sub-Dollar Retail VerDate Sep<11>2014 17:50 Feb 13, 2024 Jkt 262001 Volume and Setter Volume, and market participants can readily choose to send their orders to other exchange and offexchange venues if they deem fee levels at those other venues to be more favorable. As described above, the proposed changes represent a competitive proposal through which the Exchange is seeking to generate additional revenue with respect to its transaction pricing and to encourage the submission of additional order flow to the Exchange through volume-based tiers, which have been widely adopted by exchanges, including the Exchange. Accordingly, the Exchange believes the proposal would not burden, but rather promote, intermarket competition by enabling it to better compete with other exchanges that offer similar pricing incentives to market participants. Additionally, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 20 The fact that this market is competitive has also long been recognized by the courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows: ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’. . . .’’.21 Accordingly, the Exchange does not believe its proposed pricing changes impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the accordance with Section 6(b)(8) of the Act,22 the Exchange believes that the proposed rule change will not impose any burden on competition that is not necessary or 20 See supra note 16. v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782– 83 (December 9, 2008) (SR–NYSE–2006–21)). 22 15 U.S.C. 78f(b)(8). 21 NetCoalition PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. 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 23 and Rule 19b–4(f)(2) 24 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 change 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– MEMX–2024–02 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–MEMX–2024–02. 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 23 15 24 17 E:\FR\FM\14FEN1.SGM U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). 14FEN1 Federal Register / Vol. 89, No. 31 / Wednesday, February 14, 2024 / Notices 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–MEMX–2024–02 and should be submitted on or before March 6, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Dated: February 8, 2024. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–02980 Filed 2–13–24; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Military Reservist Economic Injury Disaster Loans; Interest Rate for Second Quarter Fiscal Year 2024 Small Business Administration. ACTION: Notice. AGENCY: This is a notice of the Military Reservist Economic Injury Disaster Loans interest rate for loans approved on or after January 29, 2024. DATES: Issued on February 6, 2024. FOR FURTHER INFORMATION CONTACT: Robert Blocker, Office of Financial Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 619–0477. SUPPLEMENTARY INFORMATION: The Small Business Administration publishes an interest rate for Military Reservist Economic Injury Disaster Loans (13 CFR 123.512) on a quarterly basis. The ddrumheller on DSK120RN23PROD with NOTICES1 SUMMARY: 25 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:50 Feb 13, 2024 Jkt 262001 interest rate will be 4.000 for loans approved on or after January 29, 2024. Robert Blocker, Chief, Disaster Loan Policy Division, Office of Financial Assistance. [FR Doc. 2024–02981 Filed 2–13–24; 8:45 am] BILLING CODE 8026–09–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #20187; OREGON Disaster Number OR–20000 Declaration of Economic Injury] Administrative Declaration of an Economic Injury Disaster for the State of Oregon U.S. Small Business Administration. ACTION: Notice. 11331 Percent Business and Small Agricultural Cooperatives without Credit Available Elsewhere .................. Non-Profit Organizations without Credit Available Elsewhere ....... 4.000 3.250 The number assigned to this disaster for economic injury is 201870. The States which received an EIDL Declaration are Oregon, Washington. (Catalog of Federal Domestic Assistance Number 59008) Isabella Guzman, Administrator. [FR Doc. 2024–03016 Filed 2–13–24; 8:45 am] BILLING CODE 8026–09–P AGENCY: SOCIAL SECURITY ADMINISTRATION This is a notice of an Economic Injury Disaster Loan (EIDL) declaration for the State of Oregon dated 02/08/2024. Incident: Winter Ice Storm. Incident Period: 01/12/2024 through 01/20/2024. DATES: Issued on 02/08/2024. Economic Injury (EIDL) Loan Application Deadline Date: 11/08/2024. ADDRESSES: Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan. FOR FURTHER INFORMATION CONTACT: Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205–6734. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator’s EIDL declaration, applications for disaster loans may be submitted online using the MySBA Loan Portal https://lending.sba.gov or other locally announced locations. Please contact the SBA disaster assistance customer service center by email at disastercustomerservice@ sba.gov or by phone at 1–800–659–2955 for further assistance. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Clackamas, Clatsop, Lane, Lincoln, Multnomah, Washington. Contiguous Counties: Oregon: Benton, Columbia, Deschutes, Douglas, Hood River, Klamath, Linn, Marion, Polk, Tillamook, Wasco, Yamhill. Washington: Clark, Pacific, Skamania, Wahkiakum. The Interest Rates are: SUMMARY: PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 [Docket No. SSA–2023–0021] Privacy Act of 1974; Matching Program AGENCY: Social Security Administration (SSA). Notice of a new matching program. ACTION: In accordance with the provisions of the Privacy Act, as amended, this notice announces a new matching program with the Office of Personnel Management (OPM). Under this matching program, OPM will provide SSA with civil service benefit and payment data. This disclosure will provide SSA with information necessary to verify an individual’s selfcertification of eligibility for the Extra Help with Medicare Prescription Drug Plan Costs program (Extra Help). It will also enable SSA to identify individuals who may qualify for Extra Help as part of the agency’s Medicare outreach efforts. DATES: The deadline to submit comments on the proposed matching program is March 15, 2024. The matching program will be applicable on March 14, 2024, or once a minimum of 30 days after publication of this notice has elapsed, whichever is later. The matching program will be in effect for a period of 18 months. ADDRESSES: You may submit comments by any one of three methods—internet, fax, or mail. Do not submit the same comments multiple times or by more than one method. Regardless of which method you choose, please state that your comments refer to Docket No. SSA–2023–0021 so that we may associate your comments with the correct regulation. Caution: You should be careful to include in your comments only SUMMARY: E:\FR\FM\14FEN1.SGM 14FEN1

Agencies

[Federal Register Volume 89, Number 31 (Wednesday, February 14, 2024)]
[Notices]
[Pages 11326-11331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02980]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99497; File No. SR-MEMX-2024-02]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on January 31, 2024, MEMX LLC (``MEMX'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The

[[Page 11327]]

Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing with the Commission a proposed rule change 
to amend the Exchange's fee schedule applicable to Members \3\ (the 
``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and (c). The 
Exchange proposes to implement the changes to the Fee Schedule pursuant 
to this proposal on February 1, 2024. The text of the proposed rule 
change is provided in Exhibit 5.
---------------------------------------------------------------------------

    \3\ See Exchange Rule 1.5(p).
---------------------------------------------------------------------------

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

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

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

1. Purpose
    The purpose of the proposed rule change is to amend the Fee 
Schedule to: (i) increase the rebate for executions of Retail Orders 
\4\ in securities priced below $1.00 per share that add displayed 
liquidity to the Exchange (such orders, ``Added Displayed Sub-Dollar 
Retail Volume'') and make a corresponding increase in the rebate 
provided for executions of Added Displayed Sub-dollar Retail Volume 
under Retail Tier 1; and (ii) modify NBBO Setter Tier 1 by adopting a 
new additive rebate for executions of added displayed volume (other 
than Retail Orders) that meet the criteria under NBBO Setter Tier 1 and 
modifying the required criteria under such tier, each as further 
described below.
---------------------------------------------------------------------------

    \4\ A ``Retail Order'' means an agency or riskless principal 
order that meets the criteria of FINRA Rule 5320.03 that originates 
from a natural person and is submitted to the Exchange by a Retail 
Member Organization (``RMO''), provided that no change is made to 
the terms of the order with respect to price or side of market and 
the order does not originate from a trading algorithm or any other 
computerized methodology. See Exchange Rule 11.21(a).
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    The Exchange first notes that it 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 only one of 16 registered equities exchanges, as well as a 
number of alternative trading systems and other off-exchange venues, to 
which market participants may direct their order flow. Based on 
publicly available information, no single registered equities exchange 
currently has more than approximately 15% of the total market share of 
executed volume of equities trading.\5\ Thus, in such a low-
concentrated and highly competitive market, no single equities exchange 
possesses significant pricing power in the execution of order flow, and 
the Exchange currently represents approximately 3% of the overall 
market share.\6\ The Exchange in particular operates a ``Maker-Taker'' 
model whereby it provides rebates to Members that add liquidity to the 
Exchange and charges fees to Members that remove liquidity from the 
Exchange. The Fee Schedule sets forth the standard rebates and fees 
applied per share for orders that add and remove liquidity, 
respectively. Additionally, in response to the competitive environment, 
the Exchange also offers tiered pricing, which provides Members with 
opportunities to qualify for higher rebates or lower fees where certain 
volume criteria and thresholds are met. Tiered pricing provides an 
incremental incentive for Members to strive for higher tier levels, 
which provides increasingly higher benefits or discounts for satisfying 
increasingly more stringent criteria.
---------------------------------------------------------------------------

    \5\ Market share percentage calculated as of January 30, 2024. 
The Exchange receives and processes data made available through 
consolidated data feeds (i.e., CTS and UTDF).
    \6\ Id.
---------------------------------------------------------------------------

Increase Rebate for Added Displayed Sub-Dollar Retail Volume
    Currently, the Exchange provides a rebate of 0.075% of the total 
dollar value of the transaction for executions of Retail Orders in 
securities priced below $1.00 per share that add displayed liquidity to 
the Exchange (such orders, ``Added Displayed Sub-Dollar Retail 
Volume''). This rebate is applicable to all executions of Added 
Displayed Sub-Dollar Retail Volume and is applicable to all Members 
(including those that qualify for any of the Exchange's volume tiers). 
Now, the Exchange proposes to increase the rebate provided to Members 
for all executions of Added Displayed Sub-Dollar Retail Volume to 0.15% 
of the total dollar value of the transaction. The Exchange also 
currently offers Retail Tier 1, whereby the Exchange provides an 
enhanced rebate of $0.0034 per share for executions of Added Displayed 
Retail Volume in securities priced at or above $1.00 and 0.075% of the 
total dollar value of the transaction for executions of Added Displayed 
Retail Volume in securities priced below $1.00 for a Member that 
qualifies for Retail Tier 1 by achieving a Retail Order ADAV \7\ that 
is equal to or great than 0.07% of the TCV.\8\ Given that the Exchange 
is now proposing to increase the rebate for all executions of Added 
Displayed Sub-dollar Retail Volume from 0.075% of the total dollar 
value of the transaction to 0.15% of the total dollar value of the 
transaction, it follows that the rebate provided under Retail Tier 1 
for executions of Added Displayed Sub-Dollar Retail Volume should also 
be increased to 0.15% of the transaction. As such, the Exchange is 
similarly proposing to increase the rebate provided to Members that 
qualify for Retail Tier 1 to 0.15% of the total dollar value of the 
transaction for executions of Added Displayed Sub-Dollar Retail Volume, 
which again, is the same rebate that will be applicable to such 
executions for all Members under this proposal.\9\
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    \7\ As set forth on the Fee Schedule, ``ADAV'' means the average 
daily added volume calculated as the number of shares added per day, 
which is calculated on a monthly basis, and ``Displayed ADAV'' means 
ADAV with respect to displayed orders.
    \8\ As set forth on the Fee Schedule, ``TCV'' means total 
consolidated volume calculated as the volume reported by all 
exchanges and trade reporting facilities to a consolidated 
transaction reporting plan for the month for which the fees apply.
    \9\ The pricing for the Retail Tier is referred to by the 
Exchange on the Fee Schedule under the description ``Added displayed 
volume, Retail Tier 1'' with a Fee Code of ``Br1'', ``Dr1'' or 
``Jr1'', as applicable, to be provided by the Exchange on the 
monthly invoices provided to Members.
---------------------------------------------------------------------------

    The purpose of increasing the rebate for executions of Added 
Displayed Sub-Dollar Retail Volume is for business and competitive 
reasons, as the Exchange believes that increasing such rebate would 
incentivize Members to submit additional Added Displayed Sub-Dollar 
Retail Volume to the Exchange, which the Exchange believes would 
promote price discovery and price formation, provide more trading 
opportunities and tighter spreads, and deepen liquidity that is subject 
to the Exchange's transparency, regulation and oversight, thereby 
enhancing market quality to the benefit of all Members and investors.

[[Page 11328]]

NBBO Setter Tier
    The Exchange currently offers NBBO Setter Tier 1 under which a 
Member may receive an additive rebate of $0.0002 per share for 
executions of Added Displayed Volume (other than Retail Orders) that 
establish the NBBO (such orders, ``Setter Volume'') by achieving an 
ADAV with respect to orders with Fee Code B \10\ that is equal to or 
greater than 0.10% of the TCV. The Exchange now proposes to modify NBBO 
Setter Tier 1 by adopting a new additive rebate under such tier that 
would apply to a qualifying Member's executions of Added Displayed 
Volume (other than Retail Orders) that have a Fee Code of D or J, and 
modifying the required criteria under such tier.
---------------------------------------------------------------------------

    \10\ The Exchange notes that orders with Fee Code B include 
orders, other than Retail Orders, that establish the NBBO.
---------------------------------------------------------------------------

    First, the Exchange proposes to adopt a new additive rebate under 
NBBO Setter Tier 1 of $0.0001 per share for a qualifying Member's 
executions of Added Displayed Volume with a Fee Code of D or J.\11\ The 
Exchange is not proposing to modify the existing additive rebate of 
$0.0002 per share for a Member's executions of Added Displayed Volume 
(other than Retail Orders) that establish the NBBO (i.e. Fee Code B), 
however, the Exchange is proposing to add language within the NBBO 
Setter Tier 1 pricing table that clarifies which Fee Codes would 
receive which Additive Rebate. Specifically, the Exchange will offer an 
additive rebate of $0.0002 per share for a qualifying Member's 
executions of Added Displayed Volume with Fee Code B and an additive 
rebate of $0.0001 per share for a qualifying Member's executions of 
Added Displayed Volume with Fee Codes D and J. To summarize, under the 
current proposal, if a Member meets the criteria under NBBO Setter Tier 
1, that Member will now receive the current additive rebate of $0.0002 
per share on all of its executions of Added Displayed Volume that 
establish the NBBO (i.e. Fee Code B), as well as a new additive rebate 
of $0.0001 per share on all of its executions of Added Displayed volume 
that do not establish the NBBO (i.e. Fee Codes D and J).\12\
---------------------------------------------------------------------------

    \11\ The Exchange notes that orders with Fee Code D include 
orders that add displayed liquidity to the Exchange but that are not 
Fee Code B or J. Orders with Fee Code J include orders, other than 
Retail Orders, that establish a new BBO on the Exchange that matches 
the NBBO first established on an away market. Thus, orders with Fee 
Code B, D or J include all orders, other than Retail Orders, that 
add displayed liquidity to the Exchange. The pricing for NBBO Setter 
Tier 1 is referred to by the Exchange on the Fee Schedule under the 
description ``NBBO Setter Tier 1'' with a Fee Code of S1 to be 
appended to the otherwise applicable Fee Code assigned by the 
Exchange on the monthly invoices for qualifying executions.
    \12\ In connection with the proposed changes to this tier, the 
Exchange is proposing to revise the note under the NBBO Setter Tier 
pricing table to reflect that the additive rebate under such tier is 
applicable to executions of Added Displayed Volume (other than 
Retail Orders) in securities priced at or above $1.00 per share 
rather than being limited to the Fee Code associated with Setter 
Volume.
---------------------------------------------------------------------------

    Second, the Exchange is proposing to modify the required criteria 
under NBBO Setter Tier 1. Currently, a Member qualifies for such tier 
by achieving an ADAV with respect to orders with a Fee Code B that is 
equal to or greater than 0.10% of the TCV. The Exchange proposes to 
keep this criteria intact and adopt an additional (i.e., alternative) 
criteria that a Member may achieve in order to qualify for such tier. 
Specifically, the Exchange proposes to modify the required criteria 
such that a Member would now qualify for such tier by achieving: (i) an 
ADAV with respect to Fee Code B that is equal to or greater than 0.10% 
of the TCV; or (ii) an ADAV with respect to orders with Fee Code B that 
is equal to or greater than 0.05% of the TCV and a Step-Up ADAV \13\ 
with respect to orders with a Fee Code B that is equal to or greater 
than 75% of the Member's December 2023 ADAV with respect to orders with 
a Fee Code B. Thus, such proposed change would add an alternative 
criteria that includes a lower overall Fee Code B ADAV threshold but 
that also requires a Member to increase its Fee Code B ADAV above its 
December 2023 ADAV by a specified threshold. Additionally, the Exchange 
is proposing that criteria (2) of NBBO Setter Tier 1 will expire no 
later than July 31, 2024, and the Exchange will indicate this in a note 
under the NBBO Setter Tier pricing table on the Fee Schedule. Again, 
the Exchange notes that it is not proposing to change the current 
additive rebate under NBBO Setter Tier 1 that is provided in addition 
to the otherwise applicable rebate for executions of added displayed 
volume (other than Retail Orders) in securities priced at or above 
$1.00 per share that establish the NBBO.
---------------------------------------------------------------------------

    \13\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means 
ADAV in the relevant baseline month subtracted from current ADAV.
---------------------------------------------------------------------------

    The purpose of adopting a new additive rebate under the NBBO Setter 
Tier 1 that applies to a qualifying Member's executions of Added 
Displayed Volume with Fee Codes D or J (in addition to Setter Volume) 
is, like the original purpose of the NBBO Setter Tier, to attract 
aggressively priced displayed liquidity to the Exchange, which the 
Exchange believes would enhance market quality by increasing execution 
opportunities, tightening spreads, and promoting price discovery on the 
Exchange. Additionally, the Exchange believes that the additive rebate 
for executions of Added Displayed Volume is commensurate with the 
corresponding required criteria under such tier and is reasonably 
related to such market quality benefits that such tier is designed to 
achieve.
    The Exchange believes that the proposed alternative criteria to 
NBBO Setter Tier 1 provides an incremental incentive for Members to 
strive for higher ADAV on the Exchange with respect to orders with a 
Fee Code B to receive the corresponding additive rebate for executions 
of Added Displayed Volume under such tier, and thus, it is designed to 
encourage Members that do not currently qualify for such tier to 
increase their aggressively priced, liquidity adding orders to the 
Exchange. The Exchange believes that the tier, as proposed, would 
further incentivize increased order flow to the Exchange, thereby 
contributing to a deeper and more liquid market to the benefit of all 
market participants. The Exchange notes that, as the proposed change to 
the required criteria under NBBO Setter Tier 1 merely provides an 
alternative criteria and does not change the existing criteria, the 
Exchange believes that such change would make the tier easier for 
Members to achieve, and, in turn, while the Exchange has no way of 
predicting with certainty how the proposed new criteria will impact 
Member activity, the Exchange expects that more Members will strive to 
qualify for such tier than currently do, resulting in the submission of 
additional order flow to the Exchange.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\14\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\15\ in particular, 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 permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    As discussed above, the Exchange operates in a highly fragmented 
and 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

[[Page 11329]]

excessive or incentives to be insufficient, and the Exchange represents 
only a small percentage of the overall market. The Commission and the 
courts have repeatedly expressed their preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and also recognized that current regulation of the market 
system ``has been remarkably successful in promoting market competition 
in its broader forms that are most important to investors and listed 
companies.'' \16\
---------------------------------------------------------------------------

    \16\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------

    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 to reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. Accordingly, competitive forces constrain 
the Exchange's transaction fees and rebates, including with respect to 
Added Displayed Volume and Sub-Dollar Retail Volume, and market 
participants can readily trade on competing venues if they deem pricing 
levels at those other venues to be more favorable. The Exchange 
believes the proposal reflects a reasonable and competitive pricing 
structure designed to incentivize market participants to direct 
additional order flow, including displayed, liquidity-adding, NBBO 
Setting and/or Retail orders, to the Exchange, which the Exchange 
believes would promote price discovery and enhance liquidity and market 
quality on the Exchange to the benefit of all Members and market 
participants.
    The Exchange believes that the proposed change to increase the 
rebate provided for all executions of Added Displayed Sub-Dollar Retail 
Volume, including those that meet the criteria under Retail Tier 1, is 
reasonable because it is designed to incentivize Members to submit 
additional displayed liquidity-adding Retail Orders to the Exchange, 
which would enhance liquidity on the Exchange and promote price 
discovery and price formation. The Exchange further believes the 
proposed increased rebate is reasonable and appropriate because it is 
comparable to and competitive with the rebates provided by other 
exchanges for executions of added displayed volume in Retail Orders in 
securities priced below $1.00 per share.\17\ The Exchange further 
believes the proposed rebate for executions of Added Displayed Sub-
Dollar Retail Volume is equitable and not unfairly discriminatory, as 
such rebate will apply equally to all Members submitting Retail Orders 
to the Exchange.
---------------------------------------------------------------------------

    \17\ See, e.g., the MIAX Pearl LLC equities trading fee schedule 
on its public website (available at: https://www.miaxglobal.com/markets/us-equities/pearl-equities/fees) which reflects a standard 
rebate of 0.15% of the total dollar value of executions that add 
liquidity in displayed Retail Orders; and the NYSE Arca equities 
trading fee schedule (at: https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf) which reflects a 
standard rebate of 0.05% of the total dollar value of executions in 
Retail Orders that add liquidity.
---------------------------------------------------------------------------

    The Exchange notes that volume-based incentives and discounts have 
been widely adopted by exchanges, including the Exchange, and are 
reasonable, equitable and not unfairly discriminatory because they are 
open to all members on an equal basis and provide additional benefits 
or discounts that are reasonably related to the value to an exchange's 
market quality associated with higher levels of market activity, such 
as higher levels of liquidity provision and/or growth patterns, and the 
introduction of higher volumes of orders into the price and volume 
discovery process. The Exchange believes that NBBO Setter Tier 1 as 
modified by the changes proposed herein is reasonable, equitable and 
not unfairly discriminatory for these same reasons, as such tier would 
provide Members with an incremental incentive to achieve certain volume 
thresholds on the Exchange, is available to all Members on an equal 
basis, and, as described above, is designed to encourage Members to 
maintain or increase their order flow, including in the form of 
displayed, liquidity-adding NBBO setting orders, to the Exchange in 
order to qualify for an additive rebate for executions of Added 
Displayed Volume, as applicable, thereby contributing to a deeper, more 
liquid and well balanced market ecosystem on the Exchange to the 
benefit of all Members and market participants. The Exchange also 
believes that such tier reflects a reasonable and equitable allocation 
of fees and rebates, as the Exchange believes that the additive rebate 
for executions of Added Displayed Volume under the proposed NBBO Setter 
Tier 1 remains commensurate with the corresponding required criteria 
under such tier and is reasonably related to the market quality 
benefits that such tier is designed to achieve, as described above.
    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 \18\ 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. As 
described more fully below in the Exchange's statement regarding the 
burden on competition, the Exchange believes that its transaction 
pricing is subject to significant competitive forces, and that the 
proposed fees and rebates described herein are appropriate to address 
such forces.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposal will result in any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Instead, as discussed above, 
the proposal is intended to incentivize market participants to direct 
additional order flow, including displayed, liquidity-adding, NBBO 
setting and Retail orders, to the Exchange, thereby enhancing liquidity 
and market quality on the Exchange to the benefit of all Members and 
market participants, as well as to generate additional revenue in a 
manner that is still consistent with the Exchange's overall pricing 
philosophy of encouraging added displayed liquidity. As a result, the 
Exchange believes the proposal would enhance its competitiveness as a 
market that attracts actionable orders, thereby making it a more 
desirable destination venue for its customers. For these reasons, the 
Exchange believes that the proposal furthers the Commission's goal in 
adopting Regulation NMS of fostering competition among orders, which 
promotes ``more efficient pricing of individual stocks for all types of 
orders, large and small.'' \19\
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    \19\ See supra note 16.
---------------------------------------------------------------------------

Intramarket Competition
    As discussed above, the Exchange believes that the proposal would 
incentivize Members to submit additional order flow, including 
displayed, liquidity-adding, aggressively priced displayed orders that 
establish the NBBO Setting, and/or Retail orders to the Exchange, 
thereby enhancing liquidity and market quality on the Exchange to the 
benefit of all Members, as well as enhancing the attractiveness of the 
Exchange as a trading venue, which the Exchange believes, in turn,

[[Page 11330]]

would continue to encourage market participants to direct additional 
order flow to the Exchange. Greater liquidity benefits all Members by 
providing more trading opportunities and encourages Members to send 
additional orders to the Exchange, thereby contributing to robust 
levels of liquidity, which benefits all market participants.
    The Exchange does not believe that the proposed change to increase 
the rebate for all executions of Added Displayed Sub-Dollar Retail 
Volume, including those that meet the criteria under Retail Tier 1, 
would impose any burden on intramarket competition because such change 
will apply to all Members uniformly, in that the proposed rebate for 
such executions would be the rebate applicable to all Members. The 
opportunity to qualify for the proposed NBBO Setter Tier 1, and thus 
receive the proposed additive rebate for executions of Added Displayed 
Volume under such tier, would be available to all Members that meet the 
associated volume requirements in any month. For the foregoing reasons, 
the Exchange believes the proposed changes would not impose any burden 
on intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
Intermarket Competition
    As noted above, 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. Members have numerous 
alternative venues that they may participate on and direct their order 
flow to, including 15 other equities exchanges and numerous alternative 
trading systems and other off-exchange venues. As noted above, no 
single registered equities exchange currently has more than 
approximately 15% of the total market share of executed volume of 
equities trading. Thus, in such a low-concentrated and highly 
competitive market, no single equities exchange possesses significant 
pricing power in the execution of order flow. Moreover, 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 to reduce use of certain categories of products, in 
response to new or different pricing structures being introduced into 
the market. Accordingly, competitive forces constrain the Exchange's 
transaction fees and rebates, including with respect to Added Displayed 
Sub-Dollar Retail Volume and Setter Volume, and market participants can 
readily choose to send their orders to other exchange and off-exchange 
venues if they deem fee levels at those other venues to be more 
favorable. As described above, the proposed changes represent a 
competitive proposal through which the Exchange is seeking to generate 
additional revenue with respect to its transaction pricing and to 
encourage the submission of additional order flow to the Exchange 
through volume-based tiers, which have been widely adopted by 
exchanges, including the Exchange. Accordingly, the Exchange believes 
the proposal would not burden, but rather promote, intermarket 
competition by enabling it to better compete with other exchanges that 
offer similar pricing incentives to market participants.
    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \20\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows: 
``[n]o one disputes that competition for order flow is `fierce.' . . . 
As the SEC explained, `[i]n the U.S. national market system, buyers and 
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders 
for execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .''.\21\ Accordingly, the Exchange does not believe its 
proposed pricing changes impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the 
accordance with Section 6(b)(8) of the Act,\22\ the Exchange believes 
that the proposed rule change will not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.
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    \20\ See supra note 16.
    \21\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
    \22\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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 \23\ and Rule 19b-4(f)(2) \24\ thereunder.
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    \23\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \24\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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 change 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 [email protected]. Please include 
file number SR-MEMX-2024-02 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-MEMX-2024-02. 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

[[Page 11331]]

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-MEMX-2024-02 and should be submitted on or before March 6, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).

    Dated: February 8, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-02980 Filed 2-13-24; 8:45 am]
BILLING CODE 8011-01-P
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