Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend MRX Options 7, Section 3, 62818-62821 [2024-16938]

Download as PDF 62818 Federal Register / Vol. 89, No. 148 / Thursday, August 1, 2024 / Notices notification by writing to the Commission’s Secretary at SecretarysOffice@sec.gov. ADDRESSES: The Commission: Secretarys-Office@sec.gov. FOR FURTHER INFORMATION CONTACT: Shawn Davis, Assistant Director, at (202) 551–6413 or Chief Counsel’s Office at (202) 551–6821; SEC, Division of Investment Management, Chief Counsel’s Office, 100 F Street NE, Washington, DC 20549–8010. Emerge ETF Trust [File No. 811–23797] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. On July 14, 2023, applicant made a liquidating distribution to its shareholders based on net asset value. Expenses of $34,485.92 incurred in connection with the liquidation were paid by the applicant. Applicant also has retained approximately $6,990.73 for the purpose of paying outstanding liabilities. Filing Dates: The application was filed on September 15, 2023 and amended on July 19, 2024. Applicant’s Address: 500 Pearl Street, Suite 740, Buffalo, New York 14202. ddrumheller on DSK120RN23PROD with NOTICES1 Morgan Stanley California Tax-Free Daily Income Trust [File No. 811– 05554] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. On September 15, 2023, applicant made a liquidating distribution to its shareholders based on net asset value. Expenses of $100,000 incurred in connection with the liquidation were paid by the applicant. Filing Date: The application was filed on July 18, 2024. Applicant’s Address: c/o Morgan Stanley Investment Management Inc., 1585 Broadway, New York, NY 10036. Morgan Stanley Tax-Free Daily Income Trust [File No. 811–03031] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. On September 15, 2023, applicant made a liquidating distribution to its shareholders based on net asset value. Expenses of $100,000 incurred in connection with the liquidation were paid by the applicant. Filing Date: The application was filed on July 18, 2024. Applicant’s Address: c/o Morgan Stanley Investment Management Inc., 1585 Broadway, New York, NY 10036. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 On July 15, 2024, the Exchange withdrew SR– MRX–2024–20 and replaced it with SR–MRX– 2024–26. On July 24, 2024, the Exchange withdrew SR–MRX–2024–26 and replaced it with this filing. 2 17 VerDate Sep<11>2014 17:17 Jul 31, 2024 Jkt 262001 Morgan Stanley Variable Investment Series [File No. 811–03692] Summary: Applicant seeks an order declaring that it has ceased to be an investment company. On July 28, 2023, applicant made a liquidating distribution to its shareholders based on net asset value. Expenses of $96,000 incurred in connection with the liquidation were paid by the applicant. Filing Date: The application was filed on July 18, 2024. Applicant’s Address: c/o Morgan Stanley Investment Management Inc., 1585 Broadway, New York, NY 10036. Virtus Stone Harbor Emerging Markets Total Income Fund [File No. 811– 22716] Summary: Applicant, a closed-end investment company, seeks an order declaring that it has ceased to be an investment company. The applicant has transferred its assets to Virtus Stone Harbor Emerging Markets Income Fund, and on December 15, 2023 made a final distribution to its shareholders based on net asset value. Expenses of $475,000 incurred in connection with the reorganization were paid by the applicant and the acquiring fund. Filing Dates: The application was filed on June 5, 2024 and amended on July 22, 2024. Applicant’s Address: 101 Munson Street, Greenfield, Massachusetts 01301–9683. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–16905 Filed 7–31–24; 8:45 am] BILLING CODE 8011–01–P 2024, Nasdaq MRX, LLC (‘‘MRX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s Pricing Schedule at Options 7.3 The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/mrx/rules, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose SECURITIES AND EXCHANGE COMMISSION [Release No. 34–100607; File No. SR–MRX– 2024–29] Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend MRX Options 7, Section 3 July 26, 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 July 24, 4 A ‘‘Crossing Order’’ is an order executed in the Exchange’s Facilitation Mechanism, Solicited Order Mechanism, Price Improvement Mechanism (‘‘PIM’’) or submitted as a Qualified Contingent Cross order. For purposes of this Pricing Schedule, orders executed in the Block Order Mechanism are PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 MRX proposes to amend the Exchange’s Pricing Schedule at Options 7, Section 3, Table 2 related to Crossing Orders. Specifically, the Exchange proposes to amend the Regular and Complex Order Non-Penny Symbol Fees for Crossing Orders.4 Options 7, Section 3—Table 2 Today, Options 7, Section 3, Table 2 applies to Regular and Complex Crossing Orders. Today, the Exchange assesses the following Regular and Complex Crossing Order Fees in Penny and Non-Penny Symbols: 5 also considered Crossing Orders. See Options 7, Section 1(c). 5 Footnotes in the Pricing Schedule are not displayed in this table. E:\FR\FM\01AUN1.SGM 01AUN1 62819 Federal Register / Vol. 89, No. 148 / Thursday, August 1, 2024 / Notices REGULAR AND COMPLEX CROSSING ORDERS Fee for crossing orders Market participant Fee for responses to crossing orders Break-up rebate for facilitation mechanism and solicited order mechanism Penny Symbols Market Maker ................................................................................................................... Non-Nasdaq MRX Market Maker (FarMM) ..................................................................... Firm Proprietary/Broker-Dealer ........................................................................................ Professional Customer .................................................................................................... Priority Customer ............................................................................................................. $0.02 0.02 0.02 0.02 0.00 $0.50 0.50 0.50 0.50 0.50 0.20 0.20 0.20 0.20 0.00 1.10 1.10 1.10 1.10 1.10 N/A N/A N/A N/A (0.30) Non-Penny Symbols Market Maker ................................................................................................................... Non-Nasdaq MRX Market Maker (FarMM) ..................................................................... Firm Proprietary/Broker-Dealer ........................................................................................ Professional Customer .................................................................................................... Priority Customer ............................................................................................................. ddrumheller on DSK120RN23PROD with NOTICES1 At this time, the Exchange proposes to amend Table 2 of Options 7, Section 3 to decrease the Non-Penny Symbol NonPriority Customer 6 Fees for Crossing Orders from $0.20 to $0.02 per contract for orders in the Facilitation Mechanism,7 Complex Facilitation Mechanism,8 Solicitation Mechanism,9 Complex Solicitation Mechanism 10 and Block Orders.11 A Priority Customer would continue to be assessed no Regular and Complex Order Fee for Crossing Orders in Non-Penny Symbols. Fees apply to the originating and contra-side orders, except for PIM Orders and Qualified Contingent Cross (‘‘QCC’’) Orders, Complex QCC Orders, QCC with Stock Orders and Complex QCC with Stock Orders. The Fee for Crossing Orders for QCC Orders, Complex QCC Orders, QCC with Stock Orders and Complex QCC with Stock Orders is $0.20 per contract for NonPriority Customer orders in Penny and Non-Penny Symbols. Priority Customer orders are not assessed a fee for Crossing Orders. Regular and Complex PIM Orders are subject to separate pricing in Part A of Options 7, Section 3. The Exchange believes that lowering the Regular and Complex Non-Priority Customer Fees for Crossing Orders in 6 ‘‘Non-Priority Customers’’ include Market Makers, Non-Nasdaq GEMX Market Makers (FarMMs), Firm Proprietary/Broker-Dealers, and Professional Customers. See Options 7, Section 1(c). 7 The Facilitation Mechanism is described in Options 3, Section 11(b). 8 The Facilitation Mechanism is described in Options 3, Section 11(c). 9 The Solicitation Mechanism is described in Options 3, Section 11(d). 10 The Solicitation Mechanism is described in Options 3, Section 11(e). 11 Block Orders are single-leg orders in singlesided auctions. See Options 3, Section 11(a). VerDate Sep<11>2014 17:17 Jul 31, 2024 Jkt 262001 Non-Penny Symbols will attract additional Crossing Orders to MRX. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,12 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,13 in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposed changes are reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for options securities transaction services that constrain its pricing determinations in that market. The fact that this market is competitive has long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, 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’. . . .’’ 14 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(4) and (5). 14 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release PO 00000 12 15 Frm 00110 Fmt 4703 Sfmt 4703 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, while adopting a series of steps to improve the current market model, 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.’’ 15 Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for options security transaction services. The Exchange is only one of seventeen options exchanges to which market participants may direct their order flow. Within this environment, market participants can freely and often do shift their order flow among the Exchange and competing venues in response to changes in their respective pricing schedules. As such, the proposal represents a reasonable attempt by the Exchange to increase its liquidity. Options 7, Section 3—Table 2 The Exchange’s proposal to amend Table 2 of Options 7, Section 3 to decrease the Regular and Complex NonPriority Customer Fees for Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract for orders in the Facilitation Mechanism, Complex No. 59039 (December 2, 2008), 73 FR 74770, 74782– 83 (December 9, 2008) (SR–NYSEArca–2006–21)). 15 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). E:\FR\FM\01AUN1.SGM 01AUN1 62820 Federal Register / Vol. 89, No. 148 / Thursday, August 1, 2024 / Notices Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders is reasonable because the Exchange would be reducing the originating and contraside order fees to enter orders in these auction mechanisms to encourage market participants to enter additional Crossing Orders on MRX. The Exchange would continue to assess no Regular and Complex Order Non-Penny Symbol Priority Customer Fee for Crossing Orders. The Exchange’s proposal to amend Table 2 of Options 7, Section 3 to decrease the Regular and Complex NonPriority Customer Fees for Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract for orders in the Facilitation Mechanism, Complex Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders is equitable and not unfairly discriminatory as all Non-Priority Customers that enter orders in the Facilitation Mechanism, Complex Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders would be uniformly assessed these lower NonPenny Symbol fees. A Priority Customer would continue to be assessed no Regular and Complex Order Fee for Crossing Orders in Non-Penny Symbols. Unlike other market participants, Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow for other market participants, to the benefit of all market participants. ddrumheller on DSK120RN23PROD with NOTICES1 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Options 7, Section 3—Table 2 In terms of intra-market competition, the Exchange’s proposal to amend Table 2 of Options 7, Section 3 to decrease the Regular and Complex Non-Priority Customer Fees for Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract for orders in the Facilitation Mechanism, Complex Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders does not impose an undue burden on competition as all Non-Priority VerDate Sep<11>2014 17:17 Jul 31, 2024 Jkt 262001 Customers that enter orders in the Facilitation Mechanism, Complex Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders would be uniformly assessed these lower NonPenny Symbol fees. Assessing lower Non-Penny Symbol Non-Priority Customer Fees for Crossing Orders and not lowering the Non-Penny Symbol Non-Priority Customer Responses for Crossing Orders does not impose an undue burden on competition. Today, a differential exists as between the Fees for Crossing Orders (the fees that apply to the originating and contraside orders) and the Responses for Crossing Orders, the Exchange does not believe that widening this differential burdens competition because lowering these originating and contra-side order fees encourages Members to initiate Facilitation Mechanisms, Complex Facilitation Mechanisms, Solicitation Mechanisms, Complex Solicitation Mechanisms and Block Orders in NonPenny Symbols. Members responding to these auctions would continue to be assessed $1.10 per contract Non-Penny Symbol fee, which is the same fee assessed today for Members removing liquidity from the order book. The Exchange would continue to assess Members the same fees to remove liquidity whether they are removing that liquidity from the order book or one of the aforementioned auctions. The liquidity the Exchange is able to attract to MRX in the form of these auctions provides other Members an opportunity to engage with auction orders and participate in the trade by breaking-up the auction order or being allocated in the auction. Members would not be able to respond to the auctions if such auctions never commence. A Priority Customer would continue to be assessed no Regular and Complex Order Fee for Crossing Orders in NonPenny Symbols. Unlike other market participants, Priority Customer liquidity benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow for other market participants, to the benefit of all market participants. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 Exchange must continually adjust its fees to remain competitive with other options exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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.16 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– MRX–2024–29 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to file number SR–MRX–2024–29. 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 16 15 E:\FR\FM\01AUN1.SGM U.S.C. 78s(b)(3)(A)(ii). 01AUN1 Federal Register / Vol. 89, No. 148 / Thursday, August 1, 2024 / Notices only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–MRX–2024–29 and should be submitted on or before August 22, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2024–16938 Filed 7–31–24; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION ddrumheller on DSK120RN23PROD with NOTICES1 [Release No. 34–100610; File Nos. SR– NYSEARCA–2024–45; SR–CboeBZX–2023– 101] Self-Regulatory Organizations; NYSE Arca, Inc.; Cboe BZX Exchange, Inc.; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Grayscale Bitcoin Mini Trust and Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Pando Asset Spot Bitcoin Trust July 26, 2024. I. Introduction Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 17 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:17 Jul 31, 2024 Jkt 262001 (‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 each of NYSE Arca, Inc. (‘‘NYSE Arca’’) and Cboe BZX Exchange, Inc. (‘‘BZX’’, and together with NYSE Arca, the ‘‘Exchanges’’) filed with the Securities and Exchange Commission (‘‘Commission’’) proposed rule changes to list and trade shares of the following. NYSE Arca proposes to list and trade shares of the Grayscale Bitcoin Mini Trust 3 under NYSE Arca Rule 8.201–E (Commodity-Based Trust Shares); and BZX proposes to list and trade shares of the Pando Asset Spot Bitcoin Trust 4 under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares). Each filing was subject to notice and comment.5 Each of the foregoing proposed rule changes, as modified by their respective amendments, is referred to herein as a ‘‘Proposal’’ and together as the ‘‘Proposals.’’ Each trust described in a Proposal is referred to herein as a ‘‘Trust’’ and together as the ‘‘Trusts.’’ As described in more detail in the Proposals’ respective amended filings,6 each Proposal seeks to list and trade shares of a Trust that would hold spot bitcoin,7 in whole or in part.8 This order approves the Proposals.9 II. Discussion and Commission Findings After careful review, the Commission finds that the Proposals are consistent with the Exchange Act and rules and U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Grayscale Bitcoin Mini Trust Under NYSE Arca Rule 8.201–E, Commodity-Based Trust Shares, Securities Exchange Act Release No. 100290 (June 6, 2024), 89 FR 49931 (June 12, 2024) (SR–NYSEARCA–2024–45) (‘‘Grayscale Filing’’). 4 See Notice of Filing of Amendment No. 1 to a Proposed Rule Change To List and Trade Shares of the Pando Asset Spot Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, Securities Exchange Act Release No. 100420 (June 25, 2024), 89 FR 54555 (July 1, 2024) (SR– CboeBZX–2023–101) (‘‘Pando Filing’’). 5 The Commission did not receive any comments on SR–NYSEARCA–2024–45. Comments received on SR–CboeBZX–2023–101 are available at https:// www.sec.gov/comments/sr-cboebzx-2023-101/ srcboebzx2023101.htm. 6 See supra notes 3–4. 7 Bitcoins are digital assets that are issued and transferred via a distributed, open-source protocol used by a peer-to-peer computer network through which transactions are recorded on a public transaction ledger known as the ‘‘Bitcoin blockchain.’’ The Bitcoin protocol governs the creation of new bitcoins and the cryptographic system that secures and verifies bitcoin transactions. 8 Each Trust proposes to hold spot bitcoin. The Pando Asset Spot Bitcoin Trust also proposes to hold cash and cash equivalents. See Pando Filing at 54563. 9 The Pando Filing is being approved on an accelerated basis. See infra Section III. PO 00000 1 15 2 17 Frm 00112 Fmt 4703 Sfmt 4703 62821 regulations thereunder applicable to a national securities exchange.10 In particular, the Commission finds that the Proposals are consistent with Section 6(b)(5) of the Exchange Act,11 which requires, among other things, that the Exchanges’ rules be designed to ‘‘prevent fraudulent and manipulative acts and practices’’ and, ‘‘in general, to protect investors and the public interest;’’ and with Section 11A(a)(1)(C)(iii) of the Exchange Act,12 which sets forth Congress’ finding that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. A. Exchange Act Section 6(b)(5) The Commission has explained that one way an exchange that lists bitcoinbased exchange-traded products (‘‘ETPs’’) can meet the obligation under Exchange Act Section 6(b)(5) that its rules be designed to prevent fraudulent and manipulative acts and practices is by demonstrating that the exchange has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference assets.13 Such an agreement 10 In approving the Proposals, the Commission has considered the Proposals’ impacts on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 11 15 U.S.C. 78f(b)(5). 12 15 U.S.C. 78k–1(a)(1)(C)(iii). 13 See, e.g., Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, To List and Trade BitcoinBased Commodity-Based Trust Shares and Trust Units, Securities Exchange Act Release No. 99306 (Jan. 10, 2024), 89 FR 3008 (Jan. 17, 2024) (SR– NYSEARCA–2021–90; SR–NYSEARCA–2023–44; SR–NYSEARCA–2023–58; SR–NASDAQ–2023–016; SR–NASDAQ–2023–019; SR–CboeBZX–2023–028; SR–CboeBZX–2023–038; SR–CboeBZX–2023–040; SR–CboeBZX–2023–042; SR–CboeBZX–2023–044; SR–CboeBZX–2023–072) (‘‘Spot Bitcoin ETP Approval Order’’); Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade Shares of the Teucrium Bitcoin Futures Fund Under NYSE Arca Rule 8.200–E, Commentary .02 (Trust Issued Receipts), Securities Exchange Act Release No. 94620 (Apr. 6, 2022), 87 FR 21676 (Apr. 12, 2022) (SR– NYSEARCA–2021–53). The Commission has provided an illustrative definition for ‘‘market of significant size’’ to include a market (or group of markets) as to which (a) there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would assist in detecting and deterring misconduct, and (b) it is unlikely that trading in the ETP would be the predominant influence on prices in that market. See Order Setting Aside Action by Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments No. 1 and 2, To List and E:\FR\FM\01AUN1.SGM Continued 01AUN1

Agencies

[Federal Register Volume 89, Number 148 (Thursday, August 1, 2024)]
[Notices]
[Pages 62818-62821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16938]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100607; File No. SR-MRX-2024-29]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend MRX 
Options 7, Section 3

July 26, 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 July 24, 2024, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I, II, and III, below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend the Exchange's Pricing Schedule at 
Options 7.\3\
---------------------------------------------------------------------------

    \3\ On July 15, 2024, the Exchange withdrew SR-MRX-2024-20 and 
replaced it with SR-MRX-2024-26. On July 24, 2024, the Exchange 
withdrew SR-MRX-2024-26 and replaced it with this filing.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    MRX proposes to amend the Exchange's Pricing Schedule at Options 7, 
Section 3, Table 2 related to Crossing Orders. Specifically, the 
Exchange proposes to amend the Regular and Complex Order Non-Penny 
Symbol Fees for Crossing Orders.\4\
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    \4\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism (``PIM'') or submitted as a Qualified Contingent Cross 
order. For purposes of this Pricing Schedule, orders executed in the 
Block Order Mechanism are also considered Crossing Orders. See 
Options 7, Section 1(c).
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Options 7, Section 3--Table 2
    Today, Options 7, Section 3, Table 2 applies to Regular and Complex 
Crossing Orders. Today, the Exchange assesses the following Regular and 
Complex Crossing Order Fees in Penny and Non-Penny Symbols: \5\
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    \5\ Footnotes in the Pricing Schedule are not displayed in this 
table.

[[Page 62819]]



                                       Regular and Complex Crossing Orders
----------------------------------------------------------------------------------------------------------------
                                                                                                Break-up rebate
                                                                Fee for     Fee for responses   for facilitation
                    Market participant                         crossing        to crossing       mechanism and
                                                                orders            orders        solicited order
                                                                                                   mechanism
----------------------------------------------------------------------------------------------------------------
                                                  Penny Symbols
----------------------------------------------------------------------------------------------------------------
Market Maker..............................................           $0.02              $0.50                N/A
Non-Nasdaq MRX Market Maker (FarMM).......................            0.02               0.50                N/A
Firm Proprietary/Broker-Dealer............................            0.02               0.50                N/A
Professional Customer.....................................            0.02               0.50                N/A
Priority Customer.........................................            0.00               0.50             (0.30)
----------------------------------------------------------------------------------------------------------------
                                                Non-Penny Symbols
----------------------------------------------------------------------------------------------------------------
Market Maker..............................................            0.20               1.10
Non-Nasdaq MRX Market Maker (FarMM).......................            0.20               1.10
Firm Proprietary/Broker-Dealer............................            0.20               1.10
Professional Customer.....................................            0.20               1.10
Priority Customer.........................................            0.00               1.10
----------------------------------------------------------------------------------------------------------------

    At this time, the Exchange proposes to amend Table 2 of Options 7, 
Section 3 to decrease the Non-Penny Symbol Non-Priority Customer \6\ 
Fees for Crossing Orders from $0.20 to $0.02 per contract for orders in 
the Facilitation Mechanism,\7\ Complex Facilitation Mechanism,\8\ 
Solicitation Mechanism,\9\ Complex Solicitation Mechanism \10\ and 
Block Orders.\11\ A Priority Customer would continue to be assessed no 
Regular and Complex Order Fee for Crossing Orders in Non-Penny Symbols.
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    \6\ ``Non-Priority Customers'' include Market Makers, Non-Nasdaq 
GEMX Market Makers (FarMMs), Firm Proprietary/Broker-Dealers, and 
Professional Customers. See Options 7, Section 1(c).
    \7\ The Facilitation Mechanism is described in Options 3, 
Section 11(b).
    \8\ The Facilitation Mechanism is described in Options 3, 
Section 11(c).
    \9\ The Solicitation Mechanism is described in Options 3, 
Section 11(d).
    \10\ The Solicitation Mechanism is described in Options 3, 
Section 11(e).
    \11\ Block Orders are single-leg orders in single-sided 
auctions. See Options 3, Section 11(a).
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    Fees apply to the originating and contra-side orders, except for 
PIM Orders and Qualified Contingent Cross (``QCC'') Orders, Complex QCC 
Orders, QCC with Stock Orders and Complex QCC with Stock Orders. The 
Fee for Crossing Orders for QCC Orders, Complex QCC Orders, QCC with 
Stock Orders and Complex QCC with Stock Orders is $0.20 per contract 
for Non-Priority Customer orders in Penny and Non-Penny Symbols. 
Priority Customer orders are not assessed a fee for Crossing Orders. 
Regular and Complex PIM Orders are subject to separate pricing in Part 
A of Options 7, Section 3.
    The Exchange believes that lowering the Regular and Complex Non-
Priority Customer Fees for Crossing Orders in Non-Penny Symbols will 
attract additional Crossing Orders to MRX.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The proposed changes are reasonable in several respects. As a 
threshold matter, the Exchange is subject to significant competitive 
forces in the market for options securities transaction services that 
constrain its pricing determinations in that market. The fact that this 
market is competitive has long been recognized by the courts. In 
NetCoalition v. Securities and Exchange Commission, 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'. . . .'' \14\
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    \14\ 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-NYSEArca-2006-
21)).
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    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, while adopting a series of steps to improve the current market 
model, 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.'' \15\
---------------------------------------------------------------------------

    \15\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
options security transaction services. The Exchange is only one of 
seventeen options exchanges to which market participants may direct 
their order flow. Within this environment, market participants can 
freely and often do shift their order flow among the Exchange and 
competing venues in response to changes in their respective pricing 
schedules. As such, the proposal represents a reasonable attempt by the 
Exchange to increase its liquidity.
Options 7, Section 3--Table 2
    The Exchange's proposal to amend Table 2 of Options 7, Section 3 to 
decrease the Regular and Complex Non-Priority Customer Fees for 
Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract 
for orders in the Facilitation Mechanism, Complex

[[Page 62820]]

Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation 
Mechanism and Block Orders is reasonable because the Exchange would be 
reducing the originating and contra-side order fees to enter orders in 
these auction mechanisms to encourage market participants to enter 
additional Crossing Orders on MRX. The Exchange would continue to 
assess no Regular and Complex Order Non-Penny Symbol Priority Customer 
Fee for Crossing Orders.
    The Exchange's proposal to amend Table 2 of Options 7, Section 3 to 
decrease the Regular and Complex Non-Priority Customer Fees for 
Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract 
for orders in the Facilitation Mechanism, Complex Facilitation 
Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and 
Block Orders is equitable and not unfairly discriminatory as all Non-
Priority Customers that enter orders in the Facilitation Mechanism, 
Complex Facilitation Mechanism, Solicitation Mechanism, Complex 
Solicitation Mechanism and Block Orders would be uniformly assessed 
these lower Non-Penny Symbol fees. A Priority Customer would continue 
to be assessed no Regular and Complex Order Fee for Crossing Orders in 
Non-Penny Symbols. Unlike other market participants, Priority Customer 
liquidity benefits all market participants by providing more trading 
opportunities, which attracts market makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow for other market participants, to the benefit of all market 
participants.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
Options 7, Section 3--Table 2
    In terms of intra-market competition, the Exchange's proposal to 
amend Table 2 of Options 7, Section 3 to decrease the Regular and 
Complex Non-Priority Customer Fees for Crossing Orders in Non-Penny 
Symbols from $0.20 to $0.02 per contract for orders in the Facilitation 
Mechanism, Complex Facilitation Mechanism, Solicitation Mechanism, 
Complex Solicitation Mechanism and Block Orders does not impose an 
undue burden on competition as all Non-Priority Customers that enter 
orders in the Facilitation Mechanism, Complex Facilitation Mechanism, 
Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders 
would be uniformly assessed these lower Non-Penny Symbol fees. 
Assessing lower Non-Penny Symbol Non-Priority Customer Fees for 
Crossing Orders and not lowering the Non-Penny Symbol Non-Priority 
Customer Responses for Crossing Orders does not impose an undue burden 
on competition.
    Today, a differential exists as between the Fees for Crossing 
Orders (the fees that apply to the originating and contra-side orders) 
and the Responses for Crossing Orders, the Exchange does not believe 
that widening this differential burdens competition because lowering 
these originating and contra-side order fees encourages Members to 
initiate Facilitation Mechanisms, Complex Facilitation Mechanisms, 
Solicitation Mechanisms, Complex Solicitation Mechanisms and Block 
Orders in Non-Penny Symbols. Members responding to these auctions would 
continue to be assessed $1.10 per contract Non-Penny Symbol fee, which 
is the same fee assessed today for Members removing liquidity from the 
order book. The Exchange would continue to assess Members the same fees 
to remove liquidity whether they are removing that liquidity from the 
order book or one of the aforementioned auctions. The liquidity the 
Exchange is able to attract to MRX in the form of these auctions 
provides other Members an opportunity to engage with auction orders and 
participate in the trade by breaking-up the auction order or being 
allocated in the auction. Members would not be able to respond to the 
auctions if such auctions never commence.
    A Priority Customer would continue to be assessed no Regular and 
Complex Order Fee for Crossing Orders in Non-Penny Symbols. Unlike 
other market participants, Priority Customer liquidity benefits all 
market participants by providing more trading opportunities, which 
attracts market makers. An increase in the activity of these market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow for other market 
participants, to the benefit of all market participants.
    In terms of inter-market competition, the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
options exchanges. Because competitors are free to modify their own 
fees in response, and because market participants may readily adjust 
their order routing practices, the Exchange believes that the degree to 
which fee changes in this market may impose any burden on competition 
is extremely limited.

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

    No written comments were either solicited or received.

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.\16\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is: (i) necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) otherwise in 
furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MRX-2024-29 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-MRX-2024-29. 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

[[Page 62821]]

only one method. The Commission will post all comments on the 
Commission's internet website (https://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of the filing also will be available for inspection and 
copying at the principal office of the Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to file number SR-MRX-2024-29 and should be submitted on 
or before August 22, 2024.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-16938 Filed 7-31-24; 8:45 am]
BILLING CODE 8011-01-P
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