[Federal Register Volume 78, Number 178 (Friday, September 13, 2013)]
[Notices]
[Pages 56762-56764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22305]
[[Page 56762]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70346; File No. SR-MIAX-2013-41]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Options Fee Schedule
September 9, 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 August 28, 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to establish a $0.05 transaction fee for
executions in standard option contracts and $0.005 transaction fee for
Mini Option contracts for Market Makers \3\ registered on the Exchange.
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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 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.
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The transaction fees for Market Makers are: (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.\4\ These transaction fees are
currently subject to a fee waiver until August 31, 2013.\5\
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\4\ See MIAX Options Fee Schedule, Section 1(a)(i)--Market Maker
Transaction Fees.
\5\ See Securities Exchange Act Release Nos. 70069 (July 30,
2013), 78 FR 47457 (August 5, 2013) (SR-MIAX-2013-36); 69710 (June
6, 2013), 78 FR 35349 (June 12, 2013) (SR-MIAX-2013-26).
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The Exchange proposes to implement the new transaction fees
beginning September 3, 2013, after the current fee waiver expires. The
proposed transaction fees are designed both to enhance the Exchange's
competitiveness with other option exchanges and to strengthen its
market quality. The Exchange believes that the new fees will increase
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 the
reduced transaction fees for Market Makers registered on the Exchange
promote tighter bid-ask spreads by Market Makers, and increase the
volume of transactions in order to allow the Exchange to compete more
effectively with other options exchanges for such transactions.
2. Statutory Basis
The Exchange believes that its proposal to amend its fee schedule
is consistent with Section 6(b) of the Act \6\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \7\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposal is fair, equitable and not
unreasonably discriminatory. The proposal is reasonable because it
results in a decrease in Market Maker transactions fees for all Market
Makers on the Exchange in order to enable the Exchange to improve its
overall competitiveness and strengthen its market quality for all
market participants. The proposed fees are fair and equitable and not
unreasonably discriminatory because they will apply equally to all
Market Makers regardless of type. All Market Makers will be subject to
the same transaction fee, 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.
The decrease in transaction fees 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.\8\
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. Decreasing transaction fees 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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\8\ 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
lower transaction
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fees.\9\ 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 proposed
fee will result in other market participants subsidizing the activity
of Market Makers since the Exchange is not proposing any changes to
increase the existing fees of other market participants in order to
compensate for the proposed fee.
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\9\ The Exchange notes that the proposal 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
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. The Exchange believes that the
proposal 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.
Decreasing transaction fees 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
proposal 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, proposals to
implement lower transaction fees to attract Market Maker volume like
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 lowering transaction fees could cause any competitive
harm to the options market or to market participants. Rather, the
proposal 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 proposal 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.\10\ 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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\10\ 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
File Number SR-MIAX-2013-41 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-2013-41. 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 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-2013-41, and should be
submitted on or before October 4, 2013.
[[Page 56764]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22305 Filed 9-12-13; 8:45 am]
BILLING CODE 8011-01-P