Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule Concerning Options Transaction Fees, 92207-92211 [2024-27222]

Download as PDF Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on November 14, 2024, it filed with the Postal Regulatory Commission a USPS Request to Add Priority Mail Express, Priority Mail & USPS Ground Advantage® Contract 716 to Competitive Product List. Documents are available at www.prc.gov, Docket Nos. MC2025–396, K2025–394. SUPPLEMENTARY INFORMATION: Sean C. Robinson, Attorney, Corporate and Postal Business Law. [FR Doc. 2024–27206 Filed 11–20–24; 8:45 am] BILLING CODE 7710–12–P A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101643; File No. SR– MEMX–2024–43] Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule Concerning Options Transaction Fees November 15, 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 October 31, 2024, MEMX LLC (‘‘MEMX’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. lotter on DSK11XQN23PROD with NOTICES1 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 pursuant to Exchange Rules 15.1(a) and (c). The Exchange proposes to implement the changes to the MEMX Options Fee Schedule (the ‘‘Options Fee Schedule’’) pursuant to this proposal immediately. The text of the proposed rule change is provided in Exhibit 5. 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Exchange Rule 1.5(p). 2 17 VerDate Sep<11>2014 18:02 Nov 20, 2024 Jkt 265001 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. 1. Purpose The purpose of the proposed rule change is to amend the Options Fee Schedule to (1) amend the Transaction Fees section of the Options Fee Schedule to separate the existing transaction rebates and fees for executions of contracts made in the Market Maker capacity 4 from transaction rebates and fees for executions of contracts made in the Professional,5 Firm,6 Away Market Maker,7 or Broker-Dealer 8 capacities; 9 (2) reduce the transaction rebate for executions of contracts where the underlying security of the applicable option is in the Penny Interval program (‘‘Penny options’’) 10 which add liquidity to the MEMX Options Book 11 and which are made in the Professional, Firm, Away Market Maker, or BrokerDealer capacities; and (3) reduce the transaction rebate for executions of contracts where the underlying security of the applicable option is not in the Penny Interval program (‘‘Non-Penny 4 MEMX Options provides fee qualifier ‘‘m’’ for market maker transactions. Fee qualifiers will be provided by the Exchange on the monthly invoices provided to Options Members. 5 MEMX Options provides fee qualifier ‘‘p’’ for professional transactions. 6 MEMX Options provides fee qualifier ‘‘f’’ for firm transactions. 7 MEMX Options provides fee qualifier ‘‘a’’ for away market maker transactions. 8 MEMX Options provides fee qualifier ‘‘b’’ for broker-dealer transactions. 9 Each of professional transactions, firm transactions, away market maker transactions, and broker-dealer transactions, and market maker transactions are referred to as ‘‘non-Customer’’ transactions. 10 MEMX Options provides Fee Code ‘‘P’’ for transactions in Penny options. Fee Codes are provided by the Exchange on the monthly invoices provided to Options Members. 11 MEMX Options provides Fee Code ‘‘D’’ for transactions which add liquidity to the MEMX Options Book. PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 92207 options’’) 12 which add liquidity to the MEMX Options Book and which are made in the Professional, Firm, Away Market Maker, or Broker-Dealer capacities, each as further described below. The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The Exchange is one of only 18 options venues to which market participants may direct their order flow. Based on publicly available information, no single options exchange has more than approximately 17.13% of the market share and currently the Exchange represents only approximately 3.29% of the market share.13 In such a lowconcentrated and highly competitive market, no single options exchange, including the Exchange, possesses significant pricing power in the execution of option order flow. The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow, discontinue, or reduce use of certain categories of products in response to fee changes. Accordingly competitive forces constrain the Exchange’s transaction fees, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange’s Fee Schedule sets forth standard rebates and rates applied per contract. Amended Transaction Fees Section of the Options Fee Schedule To Separate the Transaction Rebates and Fees for Executions in the Market Maker Capacity From Executions in Other Non-Customer Capacities Currently, the Exchange provides the same standard transaction rebates and fees for all executions in Market Maker, Professional, Firm, Away Market Maker, and Broker-Dealer capacities (each a ‘‘non-Customer’’ capacity). Specifically, the Exchange provides a standard transaction rebate of $0.45 per contract for executions of Penny options (as defined above) in all non-Customer capacities which add liquidity to the MEMX Options Book, a standard transaction rebate of $0.80 per contract for executions of non-Penny options (as defined above) in all non-Customer 12 MEMX Options provides Fee Code ‘‘N’’ for transactions in Non-Penny options. 13 Market share percentage calculated as of October 31, 2024. The Exchange receives and processes data made available through the consolidated data feeds (i.e., OPRA). E:\FR\FM\21NON1.SGM 21NON1 92208 Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 capacities which add liquidity to the MEMX Options Book, a standard transaction fee of $0.50 per contract for executions of Penny options in all nonCustomer capacities which remove liquidity from the MEMX Options Book, and a standard transaction fee of $1.21 per contract for executions of nonPenny options in all non-Customer capacities which remove liquidity from the MEMX Options Book. The Transaction Fees table within the Options Fee Schedule currently groups together all non-Customer capacities and shows that executions made in any non-Customer capacity receive the same standard transaction rebates and fees. Now, the Exchange proposes to provide different transaction rebates and fees for executions in the Market Maker capacity than are provided for other nonCustomer capacities (namely, different than the transaction rebates and fees provided for executions in the Professional, Firm, Away Market Maker, and Broker-Dealer capacities). As such, the Exchange proposes to delete the rows ‘‘Professional (‘‘p’’)’’, ‘‘Firm (‘‘f’’)’’, ‘‘Away Market Maker (‘‘a’’)’’, and ‘‘Broker-Dealer (‘‘b’’)’’ in the fourth row of the table and to create a new fifth row of the table that separates out the fees and rebates applicable to executions in the Market Maker capacity. The Exchange does not propose to change any of the fees charged or rebates provided for any executions in the Market Maker capacity, which remain in the fourth row of the table. The Exchange proposes to make these changes in order to align its Options Fee Schedule with those of other national securities exchanges and to offer different transaction fees and rebates for executions made in the non-Customer, non-Market Maker capacity from transactions made in the Customer capacity and in the Market Maker capacity. The Exchange notes that the Options Fee Schedules of several national securities exchanges separate transaction fees and rebates for executions in the Market Maker capacity from the transaction fees and rebates for executions made in other non-Customer capacities.14 The Exchange also notes 14 See the Cboe C2 Options Fee Schedule, available at https://www.cboe.com/us/options/ membership/fee_schedule/ctwo/. The Cboe C2 Options Fee Schedule separates executions in the C2 Market-Maker capacity from executions in other non-Customer capacities (the ‘‘Non-Customer, NonMarket-Maker’’ capacity on the C2 Options Fee Schedule). Specifically, the C2 Options Fee Schedule provides a transaction rebate of $0.41 for executions of Penny options in the C2 MarketMaker capacity which add liquidity to C2, a transaction fee of $0.50 for Penny options executed in the C2 Market-Maker capacity which remove liquidity from C2, a transaction rebate of $0.73 for VerDate Sep<11>2014 18:02 Nov 20, 2024 Jkt 265001 that other national securities exchanges have established separate transaction fees and rebates for executions made in each non-Customer capacity.15 Reduced Transaction Rebate for Executions of Penny Options in the Professional, Firm, Away Market Maker, or Broker Dealer Capacities Which Add Liquidity to the MEMX Options Book Currently, the Exchange provides a standard transaction rebate of $0.45 per contract for executions of Penny options executions of non-Penny options in the C2 MarketMaker capacity which add liquidity to C2, and a transaction fee of $0.90 for executions of non-Penny options in the C2 Market-Maker capacity which remove liquidity from C2. The C2 Options Fee Schedule groups together transactions in the ‘‘NonCustomer, Non-Market Maker’’ capacities, which includes Professional Customer, Firm, Broker/ Dealer, non-C2 Market-Maker, and Joint Back Office capacities. The C2 Options Fee Schedule provides a transaction rebate of $0.36 for executions of Penny options in the Non-Customer, Non-Market Maker capacity which add liquidity to C2, a transaction fee of $0.50 for Penny options executed in the NonCustomer, Non-Market Maker capacity which remove liquidity from C2, a transaction rebate of $0.65 for executions of non-Penny options in the Non-Customer, Non-Market Maker capacity which add liquidity to C2, and a transaction fee of $0.93 for executions of non-Penny options in the NonCustomer, Non-Market Maker capacity which remove liquidity from C2. See also the MIAX Pearl Options Fee Schedule, available at https:// www.miaxglobal.com/markets/us-options/pearloptions/fees. The MIAX Pearl Options Fee Schedule separates executions in the ‘‘All MIAX Pearl Market Maker’’ capacity from executions in other nonCustomer capacities (the ‘‘Non-Priority Customer, Firm, BD, and Non-MIAX Pearl Market Makers’’ origin capacities listed on the MIAX Pearl Options Fee Schedule. Specifically, the MIAX Pearl Options Fee Schedule sets forth a rebate ranging from $0.25 to $0.48 (based on tier) for executions of Penny options in the MIAX Pearl Market Maker capacity which add liquidity to MIAX Pearl where the contra side of the contract arises from a non-Priority Customer, a rebate ranging from $0.22 to $0.46 (based on tier) for executions of Penny options in the MIAX Pearl Market Maker capacity which add liquidity to MIAX Pearl where the contra side of the contract arises from a Priority Customer, a fee of $0.50 for executions of Penny Options in the MIAX Pearl Market Maker capacity which remove liquidity from MIAX Pearl, a rebate ranging from $0.30 to $0.85 (based on tier) for executions of nonPenny options in the MIAX Pearl Market Maker capacity which add liquidity to MIAX Pearl, and a fee ranging from $1.07 to $1.10 (based on tier) for executions of non-Penny options in the MIAX Pearl Market Maker capacity which remove liquidity from MIAX Pearl. 15 See the Cboe BZX Options Fee Schedule, available at https://www.cboe.com/us/options/ membership/fee_schedule/bzx/. The Cboe BZX Options Fee Schedule establishes separate ranges of transaction fees and rebates, based on tier, for executions made in the Customer, Professional, Firm/Broker-Dealer/Joint Back Office, Market Maker, and Away Market Maker capacities. See also the MIAX Options Fee Schedule, available at https://www.miaxglobal.com/markets/us-options/ miax-options/fees. The MIAX Options Fee Schedule establishes separate ranges of transaction fees and rebates for executions made in the capacity of all MIAX Market Makers, Priority Customers, Public Customers that are not Priority Customers, NonMIAX Market Makers, Non-Member Broker-Dealer, and Firm capacity. PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 (as defined above) in the Professional, Firm, Market Maker, Away Market Maker, and Broker Dealer capacities which add liquidity to the MEMX Options Book. Now, the Exchange proposes to reduce the standard transaction rebate on contracts for executions of Penny options made in non-Market Maker, non-Customer capacities which add liquidity to the MEMX Options Book from $0.45 per contract to $0.42 per contract. Specifically, the Exchange proposes to create a separate line on the Options Fee Schedule for executions made in the Professional, Firm, Away Market Maker, and Broker-Dealer capacities and to note on the Options Fee Schedule that the standard transaction rebates for executions of Penny options in such capacities which add liquidity to the MEMX Options Book is $0.42 per contract. The purpose of reducing the rebate is for business and competitive reasons as the Exchange believes that reducing such rebate would decrease the Exchange’s expenditures with respect to transaction pricing in a manner that is still consistent with the Exchange’s overall pricing philosophy of encouraging executions which add liquidity to the MEMX Options Book. As noted above, other national securities exchanges separate out the transaction rebate provided for executions in non-Customer, nonMarket Maker capacities from those executions made in Customer capacity and executions made in the Market Maker capacity. The Exchange notes that the proposed reduced rebate is competitive with, or exceeds the transaction rebate provided by other national securities exchanges for executions in non-Customer, nonMarket Maker capacities in Penny options which add liquidity.16 Reduced Transaction Rebate for Executions of Non-Penny Options in the Professional, Firm, Away Market Maker, or Broker Dealer Capacities Which Add Liquidity to the MEMX Options Book Currently, the Exchange provides a standard transaction rebate of $0.80 per contract for executions of non-Penny options (as defined above) in the Professional, Firm, Market Maker, Away Market Maker, and Broker Dealer capacities which add liquidity to the MEMX Options Book. Now, the Exchange proposes to reduce; the standard transaction rebate on contracts for the execution of non-Penny options made in non-Market Maker, nonCustomer capacities which add liquidity 16 See E:\FR\FM\21NON1.SGM infra note 22. 21NON1 Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices lotter on DSK11XQN23PROD with NOTICES1 to the MEMX Options Book from $0.80 per contract to $0.72 per contract. Specifically, the Exchange proposes to create a separate line on the Options Fee Schedule for executions made in the Professional, Firm, Away Market Maker, and Broker-Dealer capacities and to note on the Options Fee Schedule that the standard transaction rebates for execution of non-Penny options in such capacities which add liquidity to the MEMX Book is $0.72 per contract. The purpose of reducing the rebate is for business and competitive reasons as the Exchange believes that reducing such rebate would decrease the Exchange’s expenditures with respect to transaction pricing in a manner that is still consistent with the Exchange’s overall pricing philosophy of encouraging executions which add liquidity to the MEMX Options Book. As discussed above, other national securities exchanges separate out the transaction rebate for non-Customer, non-Market Maker capacities from those executions made in the Customer capacity. The Exchange notes that the proposed reduced rebate is competitive with, or exceeds the transaction rebate provided by other national securities exchanges for executions in nonCustomer, non-Market Maker capacities in non-Penny options which add liquidity.17 2. Statutory Basis The Exchange believes that its proposal to amend its Options Fee Schedule is consistent with the provisions of Section 6 of the Act,18 in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,19 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among Options Members and other persons using its facilities. The Exchange also believes the proposal furthers the objectives of Section 6(b)(5) of the Act in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. MEMX Options 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 17 See infra note 23. U.S.C. 78f. 19 15 U.S.C. 78f(b)(4) and (5). 20 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 21 See supra note 14. 18 15 VerDate Sep<11>2014 18:02 Nov 20, 2024 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.’’ 20 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 which the Exchange believes would promote price discovery and enhance liquidity and market quality on the Exchange to the benefit of all Members and market participants. The Exchange believes that it is reasonable and equitable to provide different transaction rebates and fees for executions in non-Customer, nonMarket Maker capacities, than for executions in the Customer capacity or in the Market Maker capacity. The Exchange believes that providing different rebates and assessing different fees for executions in non-Customer, non-Market Maker capacities is equitable and not unfairly discriminatory because each Member who executes contracts in such capacities will be assessed the respective fees or provided the respective rebates. As noted above, other national securities exchanges separate transaction fees and rebates for executions in the Market Maker capacity from the transaction fees and rebates for executions made in other non-Customer capacities.21 The Exchange believes that the proposed changes to reduce the rebate for executions of Penny options made in non-Market Maker, non-Customer capacities which add liquidity to the MEMX Options Book from $0.45 per contract to $0.42 per contract, and to reduce the rebate for executions of nonPenny options made in non-Market Maker, non-Customer capacities which add liquidity to the MEMX Options Jkt 265001 PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 92209 Book from $0.80 per contract to $0.72 per contract, are reasonable because such changes are designed to decrease the Exchange’s expenditures with respect to its transaction pricing in a manner that is still consistent with the Exchange’s overall pricing philosophy of encouraging executions which add liquidity to the MEMX Options Book in both Penny and non-Penny options. The Exchange believes that the proposed changes are equitable and not unfairly discriminatory because the reduced rebates will apply to all market participants who make executions of Penny options or non-Penny options, respectively, in non-Market Maker, nonCustomer capacities which add liquidity to the MEMX Options Book. The Exchange believes the proposed reduced rebate for executions of Penny options made in non-Market Maker, non-Customer capacities which add liquidity to the MEMX Options Book is appropriate because it exceeds or is comparable to, and competitive with, the rebates provided by other exchanges for executions of Penny options made in non-Market Maker and non-Customer capacities which add liquidity.22 Similarly, the Exchange believes that the proposed reduced rebate for executions of non-Penny options made in non-Market Maker, non-Customer capacities which add liquidity to the MEMX Options Book is appropriate because it exceeds or is comparable to, and competitive with, the rebates offered by other national securities exchanges on Options platforms for executions of non-Penny options made in non-Market Maker and non-Customer capacities which add liquidity.23 The 22 For example, the Cboe C2 Options Exchange offers a rebate of $0.36 for transaction in nonCustomer, non-Market Maker capacities in Penny options which add liquidity to the C2 Book. See the Cboe C2 Options Fee Schedule, available at https:// www.cboe.com/us/options/membership/fee_ schedule/ctwo/. The MIAX Pearl Options Exchange offers rebates ranging from $0.22 to $0.48 for transactions in non-Priority Customer, Firm, Broker-Dealer, and Non-MIAX Pearl Market Maker capacities in Penny options which add liquidity to the MIAX Pearl Options Book. See the MIAX Pearl Options Fee Schedule, available at https:// www.miaxglobal.com/markets/us-options/pearloptions/fees. 23 For example, the Cboe C2 Options Exchange offers a rebate of $0.65 for transaction in nonCustomer, non-Market Maker capacities in nonPenny options which add liquidity to the C2 Book. See the Cboe C2 Options Fee Schedule, available at https://www.cboe.com/us/options/membership/fee_ schedule/ctwo/. The MIAX Pearl Options Exchange offers rebates ranging from $0.85 to $0.30 for transactions in non-Priority Customer, Firm, Broker-Dealer, and Non-MIAX Pearl Market Maker capacities in non-Penny options which add liquidity to the MIAX Pearl Options Book. See the MIAX Pearl Options Fee Schedule, available at https://www.miaxglobal.com/markets/us-options/ pearl-options/fees. E:\FR\FM\21NON1.SGM 21NON1 92210 Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices Exchange believes that the proposed reduced rebates which add liquidity to the MEMX Book in Penny and nonPenny options in non-Market Maker, non-Customer capacities will provide right-sized incentives which will continue to attract non-Market Maker, non-Customer order flow to the Exchange. For the reasons discussed above, the Exchange submits that its proposed change to the Options Transaction Fee Schedule satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of the Act 24 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 are not designed to unfairly discriminate between customers, issuers, brokers, or dealers. As described more fully below in the Exchange’s statement regarding burden on competition, the Exchange believes that its transaction pricing is subject to significant competitive forces, and that the proposed rebate described herein is appropriate to address such forces. lotter on DSK11XQN23PROD with NOTICES1 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 decrease the Exchange’s expenditures, generate additional revenue with respect to its transaction pricing, incentivize market participants to direct additional order flow to the MEMX Options platform, 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. Further, MEMX Options’ proposed modified transaction fees and rebates exceed or are comparable to the transaction fees and rebates assessed by other options exchanges.25 As a result, 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.’’ 26 Intramarket Competition The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary or appropriate in 24 15 U.S.C. 78f(b)(4) and (5). supra notes 22 and 23. 26 See supra note 20. furtherance of the purposes of the Act because the proposed rebate applies equally to all Options Members. The proposed pricing structure is intended to decrease the Exchange’s expenditures and generate additional revenue with respect to its transaction pricing, in a manner that is comparable with the rebates and fees offered by other exchanges for executions in the nonCustomer, non-Market Maker capacities in both Penny and non-Penny options. The Exchange believes that the proposed reduced rebates are consistent with the Exchange’s overall pricing philosophy. As the proposed rebate is equally applicable to all market participants, the Exchange does not believe there is any burden on intramarket competition. Intermarket Competition The Exchange does not believe that the proposed rule change will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. To the contrary, the Exchange believes that the proposed pricing structure will increase competition and is intended to provide rebates for executions in nonCustomer, non-Market Maker capacities which add liquidity to the MEMX Options book which are comparable to those offered by other exchanges, which the Exchange believes will help to encourage Members to send orders to the Exchange to the benefit of all Exchange participants. As the proposed rebate is equally applicable to all market participants, the Exchange does not believe there is any burden on intramarket competition. 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.’’ 27 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 25 See VerDate Sep<11>2014 18:02 Nov 20, 2024 27 See Jkt 265001 PO 00000 supra note 20. Frm 00125 Fmt 4703 Sfmt 4703 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’ . . . .’’.28 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. 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 29 and Rule 19b–4(f)(2) 30 thereunder. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include file number SR– MEMX–2024–43 on the subject line. 28 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)). 29 15 U.S.C. 78s(b)(3)(A)(ii). 30 17 CFR 240.19b–4(f)(2). E:\FR\FM\21NON1.SGM 21NON1 Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices 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–2024–43. 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–2024–43 and should be submitted on or before December 12, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.31 Stephanie J. Fouse, Assistant Secretary. [FR Doc. 2024–27222 Filed 11–20–24; 8:45 am] lotter on DSK11XQN23PROD with NOTICES1 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–101635; File No. SR– NYSENAT–2024–31] Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE National Rule 7.13 To Remove References to the Chair of the Board and a CrossReference to NYSE National Rule 5.5 November 15, 2024. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on November 8, 2024, NYSE National, Inc. (‘‘NYSE National’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. 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 NYSE National Rule 7.13 to remove references to the Chair of the Board and a cross reference. The proposed rule change is available on the Exchange’s website at www.nyse.com, 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 self-regulatory organization 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 those 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 parts of such statements. 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 31 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:02 Nov 20, 2024 Jkt 265001 PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 92211 A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend NYSE National Rule 7.13 (Trading Suspensions) to remove references to the Chair of the Board of Directors of the Exchange (‘‘Board’’) and a cross reference. Under current Rule 7.13,4 except as otherwise stated in Rule 5.5, the Chair of the Board or the President of the Exchange, or the officer designee of the Chair or the President, has the power to suspend trading on any and all securities traded on the Exchange whenever in his or her opinion such suspension would be in the public interest. No such action shall continue longer than two days or as soon thereafter as a quorum of Directors can be assembled, unless the Board approves the continuation of such suspension. The Exchange believes that it is advisable to remove the cross-reference to Rule 5.5 in the current rule, as there is no Exchange Rule 5.5. Although a Rule 5.5 was proposed at the same time as the current Rule 7.13, Rule 5.5 was removed from the relevant filing in an amendment.5 The cross-reference is therefore meaningless. The Exchange believes that it is advisable to remove the references to the Chair in Rule 7.13 because the Chair has not acted under Rule 7.13 since the rule was adopted and the Exchange does not anticipate that an independent or non-employee Chair will have sufficient involvement in the day-to-day 4 The current text of Rule 7.13 was adopted in 2018. See Securities Exchange Act Release No. 83289 (May 17, 2018), 83 FR 23968 (May 23, 2018) (SR–NYSENAT–2018–02) (Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Amended by Amendment No. 1, To Support the Re-Launch of NYSE National, Inc. on the Pillar Trading Platform). 5 Proposed Rule 5.5 contained rules for the delisting of investment company units (an exchange traded product) and listed the rules pursuant to which the Exchange may have determined that it was appropriate to either suspend dealings in and/ or remove securities from listing. Proposed Rule 5.5 was removed in an amendment of the relevant filing. See Exhibit 1 to SR–NYSENat–2018–02 (February 21, 2018) (available at https:// www.nyse.com/publicdocs/nyse/markets/nysenational/rule-filings/filings/2018/NYSENat-201802,%20Re-file.pdf), and Amendment No. 1 to SR– NYSENat–2018–02 (May 16, 2018), at 10 (stating that ‘‘in this Amendment No. 1, the Exchange will not be proposing rules relating to the listing of Exchange Traded Products in Rule[ ] 5’’) (available at https://www.nyse.com/publicdocs/nyse/markets/ nyse-national/rule-filings/filings/2018/NYSENAT2018-02,%20Am.1.pdf). See also 83 FR 23968, supra note 4. E:\FR\FM\21NON1.SGM 21NON1

Agencies

[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92207-92211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27222]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101643; File No. SR-MEMX-2024-43]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the Fee 
Schedule Concerning Options Transaction Fees

November 15, 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 October 31, 2024, MEMX LLC (``MEMX'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange is filing with the Commission a proposed rule change 
to amend the Exchange's fee schedule applicable to Members \3\ pursuant 
to Exchange Rules 15.1(a) and (c). The Exchange proposes to implement 
the changes to the MEMX Options Fee Schedule (the ``Options Fee 
Schedule'') pursuant to this proposal immediately. 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 Options Fee 
Schedule to (1) amend the Transaction Fees section of the Options Fee 
Schedule to separate the existing transaction rebates and fees for 
executions of contracts made in the Market Maker capacity \4\ from 
transaction rebates and fees for executions of contracts made in the 
Professional,\5\ Firm,\6\ Away Market Maker,\7\ or Broker-Dealer \8\ 
capacities; \9\ (2) reduce the transaction rebate for executions of 
contracts where the underlying security of the applicable option is in 
the Penny Interval program (``Penny options'') \10\ which add liquidity 
to the MEMX Options Book \11\ and which are made in the Professional, 
Firm, Away Market Maker, or Broker-Dealer capacities; and (3) reduce 
the transaction rebate for executions of contracts where the underlying 
security of the applicable option is not in the Penny Interval program 
(``Non-Penny options'') \12\ which add liquidity to the MEMX Options 
Book and which are made in the Professional, Firm, Away Market Maker, 
or Broker-Dealer capacities, each as further described below.
---------------------------------------------------------------------------

    \4\ MEMX Options provides fee qualifier ``m'' for market maker 
transactions. Fee qualifiers will be provided by the Exchange on the 
monthly invoices provided to Options Members.
    \5\ MEMX Options provides fee qualifier ``p'' for professional 
transactions.
    \6\ MEMX Options provides fee qualifier ``f'' for firm 
transactions.
    \7\ MEMX Options provides fee qualifier ``a'' for away market 
maker transactions.
    \8\ MEMX Options provides fee qualifier ``b'' for broker-dealer 
transactions.
    \9\ Each of professional transactions, firm transactions, away 
market maker transactions, and broker-dealer transactions, and 
market maker transactions are referred to as ``non-Customer'' 
transactions.
    \10\ MEMX Options provides Fee Code ``P'' for transactions in 
Penny options. Fee Codes are provided by the Exchange on the monthly 
invoices provided to Options Members.
    \11\ MEMX Options provides Fee Code ``D'' for transactions which 
add liquidity to the MEMX Options Book.
    \12\ MEMX Options provides Fee Code ``N'' for transactions in 
Non-Penny options.
---------------------------------------------------------------------------

    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. The Exchange is one of only 
18 options venues to which market participants may direct their order 
flow. Based on publicly available information, no single options 
exchange has more than approximately 17.13% of the market share and 
currently the Exchange represents only approximately 3.29% of the 
market share.\13\ In such a low-concentrated and highly competitive 
market, no single options exchange, including the Exchange, possesses 
significant pricing power in the execution of option order flow. The 
Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow, discontinue, or reduce use of certain categories of 
products in response to fee changes. Accordingly competitive forces 
constrain the Exchange's transaction fees, and market participants can 
readily trade on competing venues if they deem pricing levels at those 
other venues to be more favorable. The Exchange's Fee Schedule sets 
forth standard rebates and rates applied per contract.
---------------------------------------------------------------------------

    \13\ Market share percentage calculated as of October 31, 2024. 
The Exchange receives and processes data made available through the 
consolidated data feeds (i.e., OPRA).
---------------------------------------------------------------------------

Amended Transaction Fees Section of the Options Fee Schedule To 
Separate the Transaction Rebates and Fees for Executions in the Market 
Maker Capacity From Executions in Other Non-Customer Capacities
    Currently, the Exchange provides the same standard transaction 
rebates and fees for all executions in Market Maker, Professional, 
Firm, Away Market Maker, and Broker-Dealer capacities (each a ``non-
Customer'' capacity). Specifically, the Exchange provides a standard 
transaction rebate of $0.45 per contract for executions of Penny 
options (as defined above) in all non-Customer capacities which add 
liquidity to the MEMX Options Book, a standard transaction rebate of 
$0.80 per contract for executions of non-Penny options (as defined 
above) in all non-Customer

[[Page 92208]]

capacities which add liquidity to the MEMX Options Book, a standard 
transaction fee of $0.50 per contract for executions of Penny options 
in all non-Customer capacities which remove liquidity from the MEMX 
Options Book, and a standard transaction fee of $1.21 per contract for 
executions of non-Penny options in all non-Customer capacities which 
remove liquidity from the MEMX Options Book. The Transaction Fees table 
within the Options Fee Schedule currently groups together all non-
Customer capacities and shows that executions made in any non-Customer 
capacity receive the same standard transaction rebates and fees. Now, 
the Exchange proposes to provide different transaction rebates and fees 
for executions in the Market Maker capacity than are provided for other 
non-Customer capacities (namely, different than the transaction rebates 
and fees provided for executions in the Professional, Firm, Away Market 
Maker, and Broker-Dealer capacities). As such, the Exchange proposes to 
delete the rows ``Professional (``p'')'', ``Firm (``f'')'', ``Away 
Market Maker (``a'')'', and ``Broker-Dealer (``b'')'' in the fourth row 
of the table and to create a new fifth row of the table that separates 
out the fees and rebates applicable to executions in the Market Maker 
capacity. The Exchange does not propose to change any of the fees 
charged or rebates provided for any executions in the Market Maker 
capacity, which remain in the fourth row of the table.
    The Exchange proposes to make these changes in order to align its 
Options Fee Schedule with those of other national securities exchanges 
and to offer different transaction fees and rebates for executions made 
in the non-Customer, non-Market Maker capacity from transactions made 
in the Customer capacity and in the Market Maker capacity. The Exchange 
notes that the Options Fee Schedules of several national securities 
exchanges separate transaction fees and rebates for executions in the 
Market Maker capacity from the transaction fees and rebates for 
executions made in other non-Customer capacities.\14\ The Exchange also 
notes that other national securities exchanges have established 
separate transaction fees and rebates for executions made in each non-
Customer capacity.\15\
---------------------------------------------------------------------------

    \14\ See the Cboe C2 Options Fee Schedule, available at https://www.cboe.com/us/options/membership/fee_schedule/ctwo/. The Cboe C2 
Options Fee Schedule separates executions in the C2 Market-Maker 
capacity from executions in other non-Customer capacities (the 
``Non-Customer, Non-Market-Maker'' capacity on the C2 Options Fee 
Schedule). Specifically, the C2 Options Fee Schedule provides a 
transaction rebate of $0.41 for executions of Penny options in the 
C2 Market-Maker capacity which add liquidity to C2, a transaction 
fee of $0.50 for Penny options executed in the C2 Market-Maker 
capacity which remove liquidity from C2, a transaction rebate of 
$0.73 for executions of non-Penny options in the C2 Market-Maker 
capacity which add liquidity to C2, and a transaction fee of $0.90 
for executions of non-Penny options in the C2 Market-Maker capacity 
which remove liquidity from C2. The C2 Options Fee Schedule groups 
together transactions in the ``Non-Customer, Non-Market Maker'' 
capacities, which includes Professional Customer, Firm, Broker/
Dealer, non-C2 Market-Maker, and Joint Back Office capacities. The 
C2 Options Fee Schedule provides a transaction rebate of $0.36 for 
executions of Penny options in the Non-Customer, Non-Market Maker 
capacity which add liquidity to C2, a transaction fee of $0.50 for 
Penny options executed in the Non-Customer, Non-Market Maker 
capacity which remove liquidity from C2, a transaction rebate of 
$0.65 for executions of non-Penny options in the Non-Customer, Non-
Market Maker capacity which add liquidity to C2, and a transaction 
fee of $0.93 for executions of non-Penny options in the Non-
Customer, Non-Market Maker capacity which remove liquidity from C2. 
See also the MIAX Pearl Options Fee Schedule, available at https://www.miaxglobal.com/markets/us-options/pearl-options/fees. The MIAX 
Pearl Options Fee Schedule separates executions in the ``All MIAX 
Pearl Market Maker'' capacity from executions in other non-Customer 
capacities (the ``Non-Priority Customer, Firm, BD, and Non-MIAX 
Pearl Market Makers'' origin capacities listed on the MIAX Pearl 
Options Fee Schedule. Specifically, the MIAX Pearl Options Fee 
Schedule sets forth a rebate ranging from $0.25 to $0.48 (based on 
tier) for executions of Penny options in the MIAX Pearl Market Maker 
capacity which add liquidity to MIAX Pearl where the contra side of 
the contract arises from a non-Priority Customer, a rebate ranging 
from $0.22 to $0.46 (based on tier) for executions of Penny options 
in the MIAX Pearl Market Maker capacity which add liquidity to MIAX 
Pearl where the contra side of the contract arises from a Priority 
Customer, a fee of $0.50 for executions of Penny Options in the MIAX 
Pearl Market Maker capacity which remove liquidity from MIAX Pearl, 
a rebate ranging from $0.30 to $0.85 (based on tier) for executions 
of non-Penny options in the MIAX Pearl Market Maker capacity which 
add liquidity to MIAX Pearl, and a fee ranging from $1.07 to $1.10 
(based on tier) for executions of non-Penny options in the MIAX 
Pearl Market Maker capacity which remove liquidity from MIAX Pearl.
    \15\ See the Cboe BZX Options Fee Schedule, available at https://www.cboe.com/us/options/membership/fee_schedule/bzx/. The Cboe BZX 
Options Fee Schedule establishes separate ranges of transaction fees 
and rebates, based on tier, for executions made in the Customer, 
Professional, Firm/Broker-Dealer/Joint Back Office, Market Maker, 
and Away Market Maker capacities. See also the MIAX Options Fee 
Schedule, available at https://www.miaxglobal.com/markets/us-options/miax-options/fees. The MIAX Options Fee Schedule establishes 
separate ranges of transaction fees and rebates for executions made 
in the capacity of all MIAX Market Makers, Priority Customers, 
Public Customers that are not Priority Customers, Non-MIAX Market 
Makers, Non-Member Broker-Dealer, and Firm capacity.
---------------------------------------------------------------------------

Reduced Transaction Rebate for Executions of Penny Options in the 
Professional, Firm, Away Market Maker, or Broker Dealer Capacities 
Which Add Liquidity to the MEMX Options Book
    Currently, the Exchange provides a standard transaction rebate of 
$0.45 per contract for executions of Penny options (as defined above) 
in the Professional, Firm, Market Maker, Away Market Maker, and Broker 
Dealer capacities which add liquidity to the MEMX Options Book. Now, 
the Exchange proposes to reduce the standard transaction rebate on 
contracts for executions of Penny options made in non-Market Maker, 
non-Customer capacities which add liquidity to the MEMX Options Book 
from $0.45 per contract to $0.42 per contract. Specifically, the 
Exchange proposes to create a separate line on the Options Fee Schedule 
for executions made in the Professional, Firm, Away Market Maker, and 
Broker-Dealer capacities and to note on the Options Fee Schedule that 
the standard transaction rebates for executions of Penny options in 
such capacities which add liquidity to the MEMX Options Book is $0.42 
per contract.
    The purpose of reducing the rebate is for business and competitive 
reasons as the Exchange believes that reducing such rebate would 
decrease the Exchange's expenditures with respect to transaction 
pricing in a manner that is still consistent with the Exchange's 
overall pricing philosophy of encouraging executions which add 
liquidity to the MEMX Options Book. As noted above, other national 
securities exchanges separate out the transaction rebate provided for 
executions in non-Customer, non-Market Maker capacities from those 
executions made in Customer capacity and executions made in the Market 
Maker capacity. The Exchange notes that the proposed reduced rebate is 
competitive with, or exceeds the transaction rebate provided by other 
national securities exchanges for executions in non-Customer, non-
Market Maker capacities in Penny options which add liquidity.\16\
---------------------------------------------------------------------------

    \16\ See infra note 22.
---------------------------------------------------------------------------

Reduced Transaction Rebate for Executions of Non-Penny Options in the 
Professional, Firm, Away Market Maker, or Broker Dealer Capacities 
Which Add Liquidity to the MEMX Options Book
    Currently, the Exchange provides a standard transaction rebate of 
$0.80 per contract for executions of non-Penny options (as defined 
above) in the Professional, Firm, Market Maker, Away Market Maker, and 
Broker Dealer capacities which add liquidity to the MEMX Options Book. 
Now, the Exchange proposes to reduce; the standard transaction rebate 
on contracts for the execution of non-Penny options made in non-Market 
Maker, non-Customer capacities which add liquidity

[[Page 92209]]

to the MEMX Options Book from $0.80 per contract to $0.72 per contract. 
Specifically, the Exchange proposes to create a separate line on the 
Options Fee Schedule for executions made in the Professional, Firm, 
Away Market Maker, and Broker-Dealer capacities and to note on the 
Options Fee Schedule that the standard transaction rebates for 
execution of non-Penny options in such capacities which add liquidity 
to the MEMX Book is $0.72 per contract.
    The purpose of reducing the rebate is for business and competitive 
reasons as the Exchange believes that reducing such rebate would 
decrease the Exchange's expenditures with respect to transaction 
pricing in a manner that is still consistent with the Exchange's 
overall pricing philosophy of encouraging executions which add 
liquidity to the MEMX Options Book. As discussed above, other national 
securities exchanges separate out the transaction rebate for non-
Customer, non-Market Maker capacities from those executions made in the 
Customer capacity. The Exchange notes that the proposed reduced rebate 
is competitive with, or exceeds the transaction rebate provided by 
other national securities exchanges for executions in non-Customer, 
non-Market Maker capacities in non-Penny options which add 
liquidity.\17\
---------------------------------------------------------------------------

    \17\ See infra note 23.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its Options Fee 
Schedule is consistent with the provisions of Section 6 of the Act,\18\ 
in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,\19\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among Options Members and other 
persons using its facilities. The Exchange also believes the proposal 
furthers the objectives of Section 6(b)(5) of the Act in that it is 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general to protect investors and the 
public interest and is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f.
    \19\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    MEMX Options 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.'' \20\
---------------------------------------------------------------------------

    \20\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005).
---------------------------------------------------------------------------

    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 which the Exchange 
believes would promote price discovery and enhance liquidity and market 
quality on the Exchange to the benefit of all Members and market 
participants.
    The Exchange believes that it is reasonable and equitable to 
provide different transaction rebates and fees for executions in non-
Customer, non-Market Maker capacities, than for executions in the 
Customer capacity or in the Market Maker capacity. The Exchange 
believes that providing different rebates and assessing different fees 
for executions in non-Customer, non-Market Maker capacities is 
equitable and not unfairly discriminatory because each Member who 
executes contracts in such capacities will be assessed the respective 
fees or provided the respective rebates. As noted above, other national 
securities exchanges separate transaction fees and rebates for 
executions in the Market Maker capacity from the transaction fees and 
rebates for executions made in other non-Customer capacities.\21\
---------------------------------------------------------------------------

    \21\ See supra note 14.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to reduce the 
rebate for executions of Penny options made in non-Market Maker, non-
Customer capacities which add liquidity to the MEMX Options Book from 
$0.45 per contract to $0.42 per contract, and to reduce the rebate for 
executions of non-Penny options made in non-Market Maker, non-Customer 
capacities which add liquidity to the MEMX Options Book from $0.80 per 
contract to $0.72 per contract, are reasonable because such changes are 
designed to decrease the Exchange's expenditures with respect to its 
transaction pricing in a manner that is still consistent with the 
Exchange's overall pricing philosophy of encouraging executions which 
add liquidity to the MEMX Options Book in both Penny and non-Penny 
options. The Exchange believes that the proposed changes are equitable 
and not unfairly discriminatory because the reduced rebates will apply 
to all market participants who make executions of Penny options or non-
Penny options, respectively, in non-Market Maker, non-Customer 
capacities which add liquidity to the MEMX Options Book.
    The Exchange believes the proposed reduced rebate for executions of 
Penny options made in non-Market Maker, non-Customer capacities which 
add liquidity to the MEMX Options Book is appropriate because it 
exceeds or is comparable to, and competitive with, the rebates provided 
by other exchanges for executions of Penny options made in non-Market 
Maker and non-Customer capacities which add liquidity.\22\ Similarly, 
the Exchange believes that the proposed reduced rebate for executions 
of non-Penny options made in non-Market Maker, non-Customer capacities 
which add liquidity to the MEMX Options Book is appropriate because it 
exceeds or is comparable to, and competitive with, the rebates offered 
by other national securities exchanges on Options platforms for 
executions of non-Penny options made in non-Market Maker and non-
Customer capacities which add liquidity.\23\ The

[[Page 92210]]

Exchange believes that the proposed reduced rebates which add liquidity 
to the MEMX Book in Penny and non-Penny options in non-Market Maker, 
non-Customer capacities will provide right-sized incentives which will 
continue to attract non-Market Maker, non-Customer order flow to the 
Exchange.
---------------------------------------------------------------------------

    \22\ For example, the Cboe C2 Options Exchange offers a rebate 
of $0.36 for transaction in non-Customer, non-Market Maker 
capacities in Penny options which add liquidity to the C2 Book. See 
the Cboe C2 Options Fee Schedule, available at https://www.cboe.com/us/options/membership/fee_schedule/ctwo/. The MIAX Pearl Options 
Exchange offers rebates ranging from $0.22 to $0.48 for transactions 
in non-Priority Customer, Firm, Broker-Dealer, and Non-MIAX Pearl 
Market Maker capacities in Penny options which add liquidity to the 
MIAX Pearl Options Book. See the MIAX Pearl Options Fee Schedule, 
available at https://www.miaxglobal.com/markets/us-options/pearl-options/fees.
    \23\ For example, the Cboe C2 Options Exchange offers a rebate 
of $0.65 for transaction in non-Customer, non-Market Maker 
capacities in non-Penny options which add liquidity to the C2 Book. 
See the Cboe C2 Options Fee Schedule, available at https://www.cboe.com/us/options/membership/fee_schedule/ctwo/. The MIAX 
Pearl Options Exchange offers rebates ranging from $0.85 to $0.30 
for transactions in non-Priority Customer, Firm, Broker-Dealer, and 
Non-MIAX Pearl Market Maker capacities in non-Penny options which 
add liquidity to the MIAX Pearl Options Book. See the MIAX Pearl 
Options Fee Schedule, available at https://www.miaxglobal.com/markets/us-options/pearl-options/fees.
---------------------------------------------------------------------------

    For the reasons discussed above, the Exchange submits that its 
proposed change to the Options Transaction Fee Schedule satisfies the 
requirements of Sections 6(b)(4) and 6(b)(5) of the Act \24\ 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 are not designed to unfairly discriminate between customers, 
issuers, brokers, or dealers. As described more fully below in the 
Exchange's statement regarding burden on competition, the Exchange 
believes that its transaction pricing is subject to significant 
competitive forces, and that the proposed rebate described herein is 
appropriate to address such forces.
---------------------------------------------------------------------------

    \24\ 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 decrease the Exchange's expenditures, 
generate additional revenue with respect to its transaction pricing, 
incentivize market participants to direct additional order flow to the 
MEMX Options platform, 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. Further, MEMX 
Options' proposed modified transaction fees and rebates exceed or are 
comparable to the transaction fees and rebates assessed by other 
options exchanges.\25\ As a result, 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.'' \26\
---------------------------------------------------------------------------

    \25\ See supra notes 22 and 23.
    \26\ See supra note 20.
---------------------------------------------------------------------------

Intramarket Competition
    The Exchange does not believe that the proposed rule change will 
impose any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed rebate applies equally to all Options Members. The proposed 
pricing structure is intended to decrease the Exchange's expenditures 
and generate additional revenue with respect to its transaction 
pricing, in a manner that is comparable with the rebates and fees 
offered by other exchanges for executions in the non-Customer, non-
Market Maker capacities in both Penny and non-Penny options. The 
Exchange believes that the proposed reduced rebates are consistent with 
the Exchange's overall pricing philosophy. As the proposed rebate is 
equally applicable to all market participants, the Exchange does not 
believe there is any burden on intramarket competition.
Intermarket Competition
    The Exchange does not believe that the proposed rule change will 
impose any burden on intermarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. To the contrary, 
the Exchange believes that the proposed pricing structure will increase 
competition and is intended to provide rebates for executions in non-
Customer, non-Market Maker capacities which add liquidity to the MEMX 
Options book which are comparable to those offered by other exchanges, 
which the Exchange believes will help to encourage Members to send 
orders to the Exchange to the benefit of all Exchange participants. As 
the proposed rebate is equally applicable to all market participants, 
the Exchange does not believe there is any burden on intramarket 
competition.
    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.'' \27\ 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' . . . .''.\28\ 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.
---------------------------------------------------------------------------

    \27\ See supra note 20.
    \28\ 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)).
---------------------------------------------------------------------------

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 \29\ and Rule 19b-4(f)(2) \30\ thereunder.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \30\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MEMX-2024-43 on the subject line.

[[Page 92211]]

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-2024-43. 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-2024-43 and should be 
submitted on or before December 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27222 Filed 11-20-24; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.