Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule Concerning Transaction Pricing, 51576-51580 [2024-13319]
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Federal Register / Vol. 89, No. 118 / Tuesday, June 18, 2024 / Notices
19(b)(3)(A)(ii) of the Act,71 and Rule
19b–4(f)(2) 72 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
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Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
PEARL–2024–25 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–PEARL–2024–25. 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
71 15
72 17
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
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copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–PEARL–2024–25 and should be
submitted on or before July 9, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.73
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13318 Filed 6–17–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–349, OMB Control No.
3235–0395]
Proposed Collection; Comment
Request; Extension: Rule 15g–6
Upon Written Request, Copies Available
From: 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’’) is soliciting comments
on the existing collection of information
provided for in Rule 15g–6—Account
Statements for Penny Stock
Customers—(17 CFR 240.15g–6) under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.). The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 15g–6 requires brokers and
dealers that sell penny stocks to provide
their customers monthly account
statements containing information with
regard to the penny stocks held in
customer accounts. The purpose of the
rule is to increase the level of disclosure
to investors concerning penny stocks
generally and specific penny stock
transactions.
The Commission estimates that
approximately 170 broker-dealers will
spend an average of approximately 78
hours annually to comply with this rule.
Thus, the total compliance burden is
approximately 13,260 burden-hours per
year.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted by
August 19, 2024.
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.
Please direct your written comments
to: David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: June 12, 2024.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13307 Filed 6–17–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100320; File No. SR–
MEMX–2024–24]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the Exchange’s Fee
Schedule Concerning Transaction
Pricing
June 12, 2024.
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 May 30,
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
Commission is publishing this notice to
1 15
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 89, No. 118 / Tuesday, June 18, 2024 / Notices
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
June 3, 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
The purpose of the proposed rule
change is to amend the Fee Schedule to:
(1) increase the rebate for executions of
Retail Orders 4 in securities priced at or
above $1.00 per share that add
displayed liquidity to the Exchange
(such orders, ‘‘Added Displayed Retail
Volume’’); (2) modify Retail Tier 1 by
increasing the rebate provided and
modifying the required criteria under
such tier; and (3) modify NBBO Setter
Tier 1 by modifying the 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
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).
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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 14.5% 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 2.4% 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 Base Rebate for Added
Displayed Retail Volume
Currently, the Exchange provides a
base rebate of $0.0032 per share for
executions of Added Displayed Retail
Volume. The Exchange now proposes to
increase the base rebate for executions
of Added Displayed Retail Volume to
$0.0034 per share.7 The purpose of
increasing the base rebate for executions
of Added Displayed Retail Volume is for
business and competitive reasons, as the
Exchange believes that increasing such
rebate as proposed would incentivize
Members to submit additional Added
Displayed Retail Volume to the
Exchange, which the Exchange believes
5 Market share percentage calculated as of May
28, 2024. The Exchange receives and processes data
made available through consolidated data feeds
(i.e., CTS and UTDF).
6 Id.
7 The proposed base rebate for executions of
Added Displayed Retail Volume is referred to by
the Exchange on the Fee Schedule under the
existing description ‘‘Added displayed volume,
Retail Order’’ with a Fee Code of ‘‘Br’’, ‘‘Dr’’ or ‘‘Jr’’,
as applicable, on execution reports.
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51577
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.
Retail Tier
As described above, the Exchange is
proposing to provide a base rebate of
$0.0034 per share for executions of
Added Displayed Retail Volume. The
Exchange also currently offers Retail
Tier 1 under which qualifying Members
may receive an enhanced rebate of
$0.0034 per share for executions of
Added Displayed Retail Volume by
achieving a Retail Order ADAV 8 that is
equal to or greater than 0.07% of the
TCV.9 Now, the Exchange proposes to
modify Retail Tier 1 by increasing the
enhanced rebate provided for
executions of Added Displayed Retail
Volume to $0.0037 per share, and by
modifying the required criteria such that
a Member would qualify for such tier by
achieving: (1) a Retail Order ADAV that
is equal to or greater than 0.20% of the
TCV; or (2) a Retail Order ADAV that is
equal to or greater than 1,000,000 shares
in the Pre-Market Session 10 and/or the
Post-Market Session.11 Thus, such
proposed change would increase the
Retail Order ADAV threshold in the first
required criteria and add an alternative
criteria (2) that provides an incentive for
Members to meet a certain Retail Order
ADAV threshold outside of regular
trading hours, i.e., during the PreMarket Session, the Post-Market
Session, or a combination of both.
The proposed changes to the Retail
Tier 1 are designed to encourage
Members to increase their Retail Order
flow, not only during regular trading
hours but also during the Pre and PostMarket Sessions, to the Exchange in
order to qualify for the enhanced rebate
for executions of Added Displayed
Retail Volume, thereby contributing to a
8 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.
9 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. The
pricing for Retail Tier 1 is referred to by the
Exchange on the Fee Schedule under the
description ‘‘Retail Tier 1’’ with a Fee Code of ‘‘Br1,
Dr1, or Jr1, as applicable,’’ on executions reports.
10 Exchange Rule 1.5(x) defines the Pre-Market
Session as the time between 7:00 a.m. and 9:30 a.m.
Eastern Time.
11 Exchange Rule 1.5(w) defines the Post-Market
Session as the time between 4:00 p.m. and 8:00 p.m.
Eastern Time.
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Federal Register / Vol. 89, No. 118 / Tuesday, June 18, 2024 / Notices
deeper and more liquid market to the
benefit of all Members and market
participants. The Exchange believes that
Retail Tier 1 as modified by the
proposed changes described above,
reflects a reasonable and competitive
pricing structure that is right-sized and
consistent with the Exchange’s overall
pricing philosophy of encouraging
added and/or displayed liquidity, not
only during regular trading hours but
during the Pre and Post-Market
Sessions.
NBBO Setter Tier
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The Exchange currently offers NBBO
Setter Tier 1 under which a Member
may receive an additive rebate of
$0.0002 per share for a qualifying
Member’s executions of Added
Displayed Volume (other than Retail
Orders) in securities priced at or above
$1.00 per share that establish the NBBO
and have a Fee Code B 12 (such orders,
‘‘Setter Volume’’), and an additive
rebate of $0.0001 per share for
executions of Added Displayed Volume
(other than Retail Orders) that do not
establish the NBBO (i.e., Fee Codes D
and J) 13 by achieving: (1) an ADAV with
respect to orders with Fee Code B that
is equal to or greater than 5,000,000
shares; or (2) an ADAV (excluding Retail
Orders) that is equal to or greater than
0.30% of the TCV.14 Now, the Exchange
proposes to modify the required criteria
under NBBO Setter Tier 1 such that a
Member would now qualify for such tier
by achieving: (1) an ADAV with respect
to orders with Fee Code B that is equal
to order greater than 5,000,000 shares;
or (2) an ADAV in securities priced at
or above $1.00 per share (excluding
Retail Orders) that is equal to or greater
than 0.30% of the TCV in securities
priced at or above over $1.00 per share.
Thus, such proposed change keeps the
first alternative criteria intact with no
changes but modifies the second
alternative criteria by excluding
securities priced below $1.00 per share
from the ADAV threshold and
12 The Exchange notes that orders with Fee Code
B include orders, other than Retail Orders, that
establish the NBBO.
13 The Exchange notes that 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.
Orders with Fee Code D include orders that add
displayed liquidity to the Exchange but that are not
Fee Code B or J, and thus, orders with Fee Code
B, D or J include all orders, other than Retail
Orders, that add displayed liquidity to the
Exchange.
14 The pricing is referred to by the Exchange on
the Fee Schedule under the existing description
‘‘NBBO Setter Tier’’ with a Fee Code of ‘‘S1’’ to be
appended to the otherwise applicable Fee Code for
qualifying executions.
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corresponding TCV calculation.15 The
Exchange is not proposing to change the
amount of the additive rebates provided
under the NBBO Setter Tier 1.
The Exchange believes that the
proposed modified criteria provides an
incremental incentive for Members to
strive for higher ADAV on the
Exchange, not only in orders with a Fee
Code B (i.e., criteria 1) but also in any
security that is priced at or above $1.00
(i.e., criteria 2) to receive the additive
rebate for qualifying 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 overall orders that add
liquidity to the Exchange. The Exchange
also believes that the criteria changes
reflect a reasonable and competitive
pricing structure that is right-sized and
consistent with the Exchange’s overall
pricing philosophy of encouraging
added and/or displayed liquidity. The
Exchange believes that the proposed
modified criteria would further
incentivize increased order flow to the
Exchange, thereby contributing to a
deeper and more liquid market to the
benefit of all Members.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,16
in general, and with Sections 6(b)(4) and
6(b)(5) of the Act,17 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
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
15 The Exchange will determine whether a
security meets the ‘‘priced at or above $1.00 per
share’’ threshold for purposes of calculating the
ADAV and TCV by using the prior day’s closing
price.
16 15 U.S.C. 78f.
17 15 U.S.C. 78f(b)(4) and (5).
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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.’’ 18
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, 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 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 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 increasing the
base rebate for executions of Added
Displayed Retail Volume is reasonable,
equitable, and not unfairly
discriminatory because, as described
above, such change is designed to
incentivize Members to maintain or
increase their Retail Order flow to the
Exchange, thus increasing liquidity and
contributing to a deeper and more liquid
market ecosystem on the Exchange. The
Exchange believes that the Retail Tier 1
and NBBO Setter Tier 1, each as
modified by the proposed changes to the
rebate and/or required criteria under
each such tier as described above, are
reasonable, equitable and not unfairly
discriminatory for these same reasons.
18 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
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Such tiers would provide Members with
an incremental incentive to achieve
certain volume thresholds on the
Exchange, are available to all Members
on an equal basis, and, as described
above, are designed to encourage
Members to maintain or increase their
order flow, including in the form of
displayed, liquidity-adding, Retail and/
or NBBO-setting orders to the Exchange
in order to qualify for an enhanced or
additive rebate, 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.
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 19 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 to the Exchange, thereby enhancing
liquidity and market quality on the
Exchange to the benefit of all Members
and market participants. 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.’’ 20
Intramarket Competition
As discussed above, the Exchange
believes that the proposal would
19 15
U.S.C. 78f(b)(4) and (5).
supra note 24.
20 See
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incentivize Members to submit
additional order flow, including
displayed, liquidity-adding, Retail, and/
or NBBO setting orders to the Exchange
during both regular trading hours, the
Pre-Market Session, and the Post-Market
Session, 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, 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 opportunity
to qualify for the proposed higher base
rebate for Added Displayed Retail
Volume and each of the proposed
modified Retail Tier 1 and NBBO Setter
Tier 1, 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
14.5% 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 and market participants
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51579
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.’’ 21 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’. . . .’’.22 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 Act.
21 Id.
22 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)).
E:\FR\FM\18JNN1.SGM
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Federal Register / Vol. 89, No. 118 / Tuesday, June 18, 2024 / Notices
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:
lotter on DSK11XQN23PROD with NOTICES1
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–2024–24 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–MEMX–2024–24. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–MEMX–2024–24 and should be
submitted on or before July 9, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–13319 Filed 6–17–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100321; File No. SR–Phlx–
2024–24]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Delay Implementation
of Certain Exchange Options 8 Rules
and Amend Options 8, Section 34(b)
June 12, 2024.
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 May 30,
2024, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘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.
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
23 15
U.S.C. 78s(b)(3)(A)(ii).
24 17 CFR 240.19b–4(f)(2).
VerDate Sep<11>2014
17:57 Jun 17, 2024
1 15
Jkt 262001
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to delay the
implementation of SR–Phlx–2023–22 3
and amend Options 8, Section 34(b),
FLEX Trading (order types), which is
also being delayed.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/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 delay the
implementation of SR–Phlx–2023–22
and amend Options 8, Section 34(b),
FLEX Trading (order types), which is
also being delayed. These rules are
currently effective, but not operative.
Each change is described below.
Delay of Implementation
As noted herein, Phlx filed SR–Phlx–
2023–22 to amend several Phlx Options
8 rules related to Phlx’s trading floor
and stated that the rule change would be
implemented on or before March 29,
2024.4 Thereafter, the Exchange delayed
the implementation of SR–Phlx–2023–
22 to permit the Exchange additional
3 See Securities Exchange Act Release No. 97658
(June 7, 2023), 88 FR 38562 (June 13, 2023) (SR–
Phlx–2023–22) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Amend
Various Options 8 Rules). See also Securities
Exchange Act Release No. 98919 (November 13,
2024), 88 FR 80363 (November 17, 2023) (SR–Phlx–
2023–48) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Delay the
Implementation of the FLEX and Cabinet
Automation) (‘‘SR–Phlx–2023–22’’).
4 See Securities Exchange Act Release No. 97658
(June 7, 2023), 88 FR 38562 (June 13, 2023) (SR–
Phlx–2023–22) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Amend
Various Options 8 Rules) (‘‘SR–Phlx–2023–22’’).
E:\FR\FM\18JNN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 118 (Tuesday, June 18, 2024)]
[Notices]
[Pages 51576-51580]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13319]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100320; File No. SR-MEMX-2024-24]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule Concerning Transaction Pricing
June 12, 2024.
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 May 30, 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 Commission is publishing
this notice to
[[Page 51577]]
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 June 3, 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: (1) increase the rebate for executions of Retail Orders
\4\ in securities priced at or above $1.00 per share that add displayed
liquidity to the Exchange (such orders, ``Added Displayed Retail
Volume''); (2) modify Retail Tier 1 by increasing the rebate provided
and modifying the required criteria under such tier; and (3) modify
NBBO Setter Tier 1 by 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).
---------------------------------------------------------------------------
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 14.5% 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 2.4% 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 May 28, 2024. The
Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
\6\ Id.
---------------------------------------------------------------------------
Increase Base Rebate for Added Displayed Retail Volume
Currently, the Exchange provides a base rebate of $0.0032 per share
for executions of Added Displayed Retail Volume. The Exchange now
proposes to increase the base rebate for executions of Added Displayed
Retail Volume to $0.0034 per share.\7\ The purpose of increasing the
base rebate for executions of Added Displayed Retail Volume is for
business and competitive reasons, as the Exchange believes that
increasing such rebate as proposed would incentivize Members to submit
additional Added Displayed 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\ The proposed base rebate for executions of Added Displayed
Retail Volume is referred to by the Exchange on the Fee Schedule
under the existing description ``Added displayed volume, Retail
Order'' with a Fee Code of ``Br'', ``Dr'' or ``Jr'', as applicable,
on execution reports.
---------------------------------------------------------------------------
Retail Tier
As described above, the Exchange is proposing to provide a base
rebate of $0.0034 per share for executions of Added Displayed Retail
Volume. The Exchange also currently offers Retail Tier 1 under which
qualifying Members may receive an enhanced rebate of $0.0034 per share
for executions of Added Displayed Retail Volume by achieving a Retail
Order ADAV \8\ that is equal to or greater than 0.07% of the TCV.\9\
Now, the Exchange proposes to modify Retail Tier 1 by increasing the
enhanced rebate provided for executions of Added Displayed Retail
Volume to $0.0037 per share, and by modifying the required criteria
such that a Member would qualify for such tier by achieving: (1) a
Retail Order ADAV that is equal to or greater than 0.20% of the TCV; or
(2) a Retail Order ADAV that is equal to or greater than 1,000,000
shares in the Pre-Market Session \10\ and/or the Post-Market
Session.\11\ Thus, such proposed change would increase the Retail Order
ADAV threshold in the first required criteria and add an alternative
criteria (2) that provides an incentive for Members to meet a certain
Retail Order ADAV threshold outside of regular trading hours, i.e.,
during the Pre-Market Session, the Post-Market Session, or a
combination of both.
---------------------------------------------------------------------------
\8\ 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.
\9\ 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.
The pricing for Retail Tier 1 is referred to by the Exchange on the
Fee Schedule under the description ``Retail Tier 1'' with a Fee Code
of ``Br1, Dr1, or Jr1, as applicable,'' on executions reports.
\10\ Exchange Rule 1.5(x) defines the Pre-Market Session as the
time between 7:00 a.m. and 9:30 a.m. Eastern Time.
\11\ Exchange Rule 1.5(w) defines the Post-Market Session as the
time between 4:00 p.m. and 8:00 p.m. Eastern Time.
---------------------------------------------------------------------------
The proposed changes to the Retail Tier 1 are designed to encourage
Members to increase their Retail Order flow, not only during regular
trading hours but also during the Pre and Post-Market Sessions, to the
Exchange in order to qualify for the enhanced rebate for executions of
Added Displayed Retail Volume, thereby contributing to a
[[Page 51578]]
deeper and more liquid market to the benefit of all Members and market
participants. The Exchange believes that Retail Tier 1 as modified by
the proposed changes described above, reflects a reasonable and
competitive pricing structure that is right-sized and consistent with
the Exchange's overall pricing philosophy of encouraging added and/or
displayed liquidity, not only during regular trading hours but during
the Pre and Post-Market Sessions.
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 a
qualifying Member's executions of Added Displayed Volume (other than
Retail Orders) in securities priced at or above $1.00 per share that
establish the NBBO and have a Fee Code B \12\ (such orders, ``Setter
Volume''), and an additive rebate of $0.0001 per share for executions
of Added Displayed Volume (other than Retail Orders) that do not
establish the NBBO (i.e., Fee Codes D and J) \13\ by achieving: (1) an
ADAV with respect to orders with Fee Code B that is equal to or greater
than 5,000,000 shares; or (2) an ADAV (excluding Retail Orders) that is
equal to or greater than 0.30% of the TCV.\14\ Now, the Exchange
proposes to modify the required criteria under NBBO Setter Tier 1 such
that a Member would now qualify for such tier by achieving: (1) an ADAV
with respect to orders with Fee Code B that is equal to order greater
than 5,000,000 shares; or (2) an ADAV in securities priced at or above
$1.00 per share (excluding Retail Orders) that is equal to or greater
than 0.30% of the TCV in securities priced at or above over $1.00 per
share. Thus, such proposed change keeps the first alternative criteria
intact with no changes but modifies the second alternative criteria by
excluding securities priced below $1.00 per share from the ADAV
threshold and corresponding TCV calculation.\15\ The Exchange is not
proposing to change the amount of the additive rebates provided under
the NBBO Setter Tier 1.
---------------------------------------------------------------------------
\12\ The Exchange notes that orders with Fee Code B include
orders, other than Retail Orders, that establish the NBBO.
\13\ The Exchange notes that 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.
Orders with Fee Code D include orders that add displayed liquidity
to the Exchange but that are not Fee Code B or J, and thus, orders
with Fee Code B, D or J include all orders, other than Retail
Orders, that add displayed liquidity to the Exchange.
\14\ The pricing is referred to by the Exchange on the Fee
Schedule under the existing description ``NBBO Setter Tier'' with a
Fee Code of ``S1'' to be appended to the otherwise applicable Fee
Code for qualifying executions.
\15\ The Exchange will determine whether a security meets the
``priced at or above $1.00 per share'' threshold for purposes of
calculating the ADAV and TCV by using the prior day's closing price.
---------------------------------------------------------------------------
The Exchange believes that the proposed modified criteria provides
an incremental incentive for Members to strive for higher ADAV on the
Exchange, not only in orders with a Fee Code B (i.e., criteria 1) but
also in any security that is priced at or above $1.00 (i.e., criteria
2) to receive the additive rebate for qualifying 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
overall orders that add liquidity to the Exchange. The Exchange also
believes that the criteria changes reflect a reasonable and competitive
pricing structure that is right-sized and consistent with the
Exchange's overall pricing philosophy of encouraging added and/or
displayed liquidity. The Exchange believes that the proposed modified
criteria would further incentivize increased order flow to the
Exchange, thereby contributing to a deeper and more liquid market to
the benefit of all Members.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\16\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\17\ 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.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78f.
\17\ 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 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.'' \18\
---------------------------------------------------------------------------
\18\ 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, 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 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 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 increasing the base
rebate for executions of Added Displayed Retail Volume is reasonable,
equitable, and not unfairly discriminatory because, as described above,
such change is designed to incentivize Members to maintain or increase
their Retail Order flow to the Exchange, thus increasing liquidity and
contributing to a deeper and more liquid market ecosystem on the
Exchange. The Exchange believes that the Retail Tier 1 and NBBO Setter
Tier 1, each as modified by the proposed changes to the rebate and/or
required criteria under each such tier as described above, are
reasonable, equitable and not unfairly discriminatory for these same
reasons.
[[Page 51579]]
Such tiers would provide Members with an incremental incentive to
achieve certain volume thresholds on the Exchange, are available to all
Members on an equal basis, and, as described above, are designed to
encourage Members to maintain or increase their order flow, including
in the form of displayed, liquidity-adding, Retail and/or NBBO-setting
orders to the Exchange in order to qualify for an enhanced or additive
rebate, 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.
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 \19\ 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.
---------------------------------------------------------------------------
\19\ 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 to the Exchange, thereby enhancing liquidity and
market quality on the Exchange to the benefit of all Members and market
participants. 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.'' \20\
---------------------------------------------------------------------------
\20\ See supra note 24.
---------------------------------------------------------------------------
Intramarket Competition
As discussed above, the Exchange believes that the proposal would
incentivize Members to submit additional order flow, including
displayed, liquidity-adding, Retail, and/or NBBO setting orders to the
Exchange during both regular trading hours, the Pre-Market Session, and
the Post-Market Session, 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, 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 opportunity to qualify for the proposed higher base
rebate for Added Displayed Retail Volume and each of the proposed
modified Retail Tier 1 and NBBO Setter Tier 1, 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 14.5% 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 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.'' \21\ 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'. . . .''.\22\ 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 Act.
---------------------------------------------------------------------------
\21\ Id.
\22\ 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)).
---------------------------------------------------------------------------
[[Page 51580]]
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.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78s(b)(3)(A)(ii).
\24\ 17 CFR 240.19b-4(f)(2).
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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-2024-24 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MEMX-2024-24. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MEMX-2024-24 and should be
submitted on or before July 9, 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).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-13319 Filed 6-17-24; 8:45 am]
BILLING CODE 8011-01-P
