[Federal Register Volume 78, Number 150 (Monday, August 5, 2013)]
[Notices]
[Pages 47457-47459]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18758]
[[Page 47457]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70069; File No. SR-MIAX-2013-36]
Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the MIAX Fee Schedule
July 30, 2013.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on July 22, 2013, Miami International Securities
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and
Exchange Commission (``Commission'') a 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing a proposal to amend its Fee Schedule.
The text of the proposed rule change is available on the Exchange's
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at
MIAX's principal office, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to extend its current waiver of all
transaction fees in Section 1(a)(i) of the MIAX Options Fee Schedule
(the ``fee waiver'') that apply to Market Makers \3\ registered on the
Exchange until August 31, 2013.\4\ The fee waiver currently applies to
the period beginning June 3, 2013 and ending July 31, 2013.\5\
Specifically, during this period, the Exchange will continue to waive
the following transaction fees: (i) RMMs $0.23 per contract for
standard options or $0.023 for Mini Options; (ii) LMMs $0.20 per
contract for standard options or $0.020 for Mini Options; (iii) DLMMs
and PLMMs $0.18 per contract for standard options or $0.018 for Mini
Options; and (iv) DPLMMs $0.16 per contract for standard options or
$0.016 for Mini Options.\6\
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\3\ Market Makers may be registered as a Lead Market Maker or as
a Registered Market Maker. See Exchange Rule 600(b). Market Makers
registered on the Exchange for purposes of the transaction fee
waiver and Section 1(a)(i) of the Fee Schedule include: (i)
Registered Market Maker (``RMM''); (ii) Lead Market Maker (``LMM'');
(iii) Directed Order Lead Market Maker (``DLMM''); (iv) Primary Lead
Market Maker (``PLMM''); and Directed Order Primary Lead Market
Maker (``DPLMM''). See MIAX Options Fee Schedule, Section 1(a)(i)--
Market Maker Transaction Fees.
\4\ See Securities Exchange Act Release No. 69710 (June 6,
2013), 78 FR 35349 (June 12, 2013) (SR-MIAX-2013-26). The fee waiver
only applies to Market Maker transaction fees in Section 1(a)(i) of
the MIAX Options Fee Schedule. See MIAX Options Fee Schedule,
Section 1(a)(i)--Market Maker Transaction Fees. The Exchange notes
that the fee waiver has no effect on other fees and dues that may
apply to Market Makers including marketing fees, Options Regulatory
Fees, market data, and membership application fees. At the end of
the period, Market Maker Transaction Fees will return to the prior
fee rates unless the Exchange files another 19b-4 Rule Filing to
amend its fees.
\5\ See Securities Exchange Act Release No. 69710 (June 6,
2013), 78 FR 35349 (June 12, 2013) (SR-MIAX-2013-26).
\6\ See MIAX Options Fee Schedule, Section 1(a)(i)--Market Maker
Transaction Fees.
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The fee waiver is designed both to enhance the Exchange's
competitiveness with other option exchanges and to strengthen its
market quality. The Exchange believes that the fee waiver increases
both intermarket and intramarket competition by incenting market
participants and market makers on other exchanges to register as Market
Makers on the Exchange. In addition, the Exchange believes that waiving
transaction fees for Market Makers registered on the Exchange promotes
tighter bid-ask spreads by Market Makers, and increases the volume of
transactions in order to allow the Exchange to compete more effectively
with other options exchanges for such transactions. The Exchange notes
that the Exchange's daily percentage of the total market volume in MIAX
listed options has increased since the beginning of the fee waiver--
indicating that the fee waiver has enabled the Exchange to compete more
effectively with other options exchanges for such transactions.
The Exchange notes that, while the proposal is not based on that of
another exchange, that fee waivers are often used by exchanges to
increase their competitiveness.\7\
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\7\ See e.g., Securities Exchange Act Release Nos. 66427
(February 21, 2012), 77 FR 11608 (February 27, 2012) (SR-BATS-2012-
011); 65007 (August 2, 2011), 76 FR 48190 (August 8, 2011) (SR-CBOE-
2011-071); 56862 (November 29, 2007), 72 FR 68918 (December 6, 2007)
(SR-CBOE-2007-135); 55833 (May 31, 2007), 72 FR 31358 (June 6, 2007)
(SR-ISE-2007-28).
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2. Statutory Basis
The Exchange believes that its proposal to amend its fee schedule
is consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the fee waiver is fair, equitable and
not unreasonably discriminatory. The fee waiver is reasonable because
it waives transaction fees for a limited period in order to enable the
Exchange to improve its overall competitiveness and strengthen its
market quality for all market participants. The proposed fee waiver is
fair and equitable and not unreasonably discriminatory because it will
apply equally to all Market Makers. All similarly situated Market
Makers are subject to the same fee waiver, and access to the Exchange
is offered on terms that are not unfairly discriminatory. The
registration as an Exchange Market Maker is equally available to all
market participants and Electronic Exchange Members (``EEMs'') that
satisfy the requirements of Rule 600. Any market participant may choose
to satisfy the additional requirements and obligations of being a
Market Maker in order to qualify for the transaction fee waiver.
The fee waiver for Market Makers, and no other market participants,
is equitable and not unfairly discriminatory because Market Markers on
the Exchange have enhanced quoting obligations measured in both
quantity (% time) and quality (minimum bid-ask differentials) that
other market participants do not have.\10\ The proposal is reasonably
designed to enhance the quality of quoting and volume transactions by
limiting the proposal to those market participants that have these
enhanced obligations to deliver quality markets. Waiving fees during
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this period should incent market participants and market makers on
other exchanges to register as Market Makers on the Exchange, which
will enhance the quality of quoting and increase the volume of
contracts traded in options listed on MIAX. To the extent that this
purpose is achieved, all the Exchange's market participants should
benefit from the improved market liquidity. Enhanced market quality and
increased transaction volume that results from the increase in Market
Maker activity on the Exchange will benefit all market participants and
improve competition on the Exchange.
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\10\ See MIAX Rules 603, 604, 605.
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The Exchange believes that an increase in the number of Market
Makers, and an increase in the execution volume from Market Makers,
will result in increased revenue from other fees and dues that may
apply to Market Makers that may potentially offset a portion of the fee
waiver.\11\ While the Exchange believes that an increase in the number
of Market Makers, and an increase in the execution volume from Market
Makers, may potentially result in increased trading activity of other
market participants, the Exchange does not believe that the fee waiver
will result in other market participants subsidizing the activity of
Market Makers during the fee waiver period since the Exchange is not
proposing any changes to increase the existing fees of other market
participants in order to compensate for the temporary transaction fee
waiver.
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\11\ The Exchange notes that the fee waiver has no effect on
other fees and dues that may apply to Market Makers including
marketing fees, Options Regulatory Fees, market data, and membership
application fees.
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B. Self-Regulatory Organization's Statement on Burden on Competition
MIAX does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. The Exchange believes that the fee waiver
increases both intermarket and intramarket competition by incenting
market participants and market makers on other exchanges to register as
Market Makers on the Exchange, which will enhance the quality of
quoting and increase the volume of contracts traded on MIAX. To the
extent that there is an additional competitive burden on non-Market
Makers, the Exchange believes that this is appropriate because Market
Markers registered on the Exchange have enhanced quoting obligations
measured in both quantity (% time) and quality (minimum bid-ask
differentials) that other market participants do not have. Waiving fees
during this period should incent market participants and market makers
on other exchanges to register as Market Makers on the Exchange, which
will enhance the quality of quoting and increase the volume of
contracts traded here. To the extent that this purpose is achieved, all
the Exchange's market participants should benefit from the improved
market liquidity. Enhanced market quality and increased transaction
volume that results from the anticipated increase in Market Maker
activity on the Exchange will benefit all market participants and
improve competition on the Exchange. The Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive. In such an environment, the Exchange
must continually adjust its fees to remain competitive with other
exchanges and to attract order flow. The Exchange believes that the fee
waiver reflects this competitive environment because it reduces the
Exchange's fees in a manner that encourages market participants to
register as Market Makers, to provide liquidity, and to attract order
flow to the Exchange. Given the robust competition for volume among
options markets, many of which offer the same products, implementing a
fee waiver program to attract Market Maker volume like the one being
extended in this filing is consistent with the above-mentioned goals of
the Act. This is especially true for the smaller options markets, such
as MIAX, which is competing for volume with much larger exchanges that
dominate the options trading industry. As a new exchange, MIAX has a
nominal percentage of the average daily trading volume in options, so
it is unlikely that the fee waiver could cause any competitive harm to
the options market or to market participants. Rather, the fee waiver is
a modest attempt by a small options market to attract order volume away
from larger competitors by adopting an innovative pricing strategy. The
Exchange notes that if the extension of the fee waiver results in a
modest percentage increase in the average daily trading volume in
options executing on MIAX, while such percentage would represent a
large volume increase for MIAX, it would represent a minimal reduction
in volume of its larger competitors in the industry. The Exchange
believes that the proposal will help further competition, because
market participants will have yet another additional alternative in
determining where to execute orders and post liquidity if they factor
the benefits of Market Maker transaction fees into the determination.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor 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.\12\ At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include SR-
MIAX-2013-36 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2013-36. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule
[[Page 47459]]
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 Web site 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 10:00 a.m. and 3:00 p.m. Copies of
the filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-MIAX-2013-36 and should be submitted on or before August
26, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18758 Filed 8-2-13; 8:45 am]
BILLING CODE 8011-01-P