[Federal Register Volume 79, Number 50 (Friday, March 14, 2014)]
[Notices]
[Pages 14562-14563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-05595]
[[Page 14562]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71672; File No. SR-MIAX-2014-10]
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
March 10, 2014.
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 February 27, 2014, 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 the
Substance of the Proposed Rule Change
The Exchange is filing a proposal to amend the MIAX Option Fee
Schedule (``Fee Schedule'') to specify the frequency with which the
Exchange may change the Options Regulatory Fee (``ORF'').\3\
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\3\ The Commission notes that MIAX also is proposing to increase
the ORF from $0.0040 per contract to $0.0045 per contract.
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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 amend the Fee Schedule (i) to increase the
ORF from $0.0040 per contract to $0.0045 per contract; and (ii) to
specify the frequency with which the Exchange may change the ORF. The
Exchange proposes to increase the ORF in light of increased regulatory
costs and expected volume levels in 2014. The filing is based on the
substantially similar filings filed by NYSE Arca, Inc and NYSE MKT
LLC.\4\ The proposed fee change would be operative on April 1, 2014.
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\4\ See Securities Exchange Act Release Nos. 70500 (September
25, 2013), 78 FR 60361 (October 1, 2013) (SR-NYSEArca-2013-91);
70499 (September 25, 2013), 78 FR 60362 (October 1, 2013) (SR-
NYSEMKT-2013-76).
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The Exchange proposes to increase the ORF from $0.0040 per contract
to $0.0045 per contract in light of increased regulatory costs and
expected volume levels in 2014. The ORF is assessed by the Exchange on
each Member for all options transactions executed or cleared by the
Member that are cleared by The Options Clearing Corporation (``OCC'')
in the customer range (i.e., transactions that clear in the customer
account of the Member's clearing firm at OCC) regardless of the
exchange on which the transaction occurs. The fee is collected
indirectly from Members through their clearing firms by OCC on behalf
of the Exchange. The dues and fees paid by Members go into the general
funds of the Exchange, a portion of which is used to help pay the costs
of regulation. The ORF is designed to recover a material portion of the
costs to the Exchange of the supervision and regulation of Member
customer options business, including performing routine surveillances,
investigations, examinations, financial monitoring, as well as policy,
rulemaking, interpretive and enforcement activities. The Exchange
believes that revenue generated from the ORF, when combined with all of
the Exchange's other regulatory fees and fines, will cover a material
portion, but not all, of the Exchange's regulatory costs. The Exchange
notes that its regulatory responsibilities with respect to Member
compliance with options sales practice rules have largely been
allocated to FINRA under a 17d-2 agreement. The ORF is not designed to
cover the cost of that options sales practice regulation. The Exchange
will continue to monitor the amount of revenue collected from the ORF
to ensure that it, in combination with its other regulatory fees and
fines, does not exceed the Exchange's total regulatory costs. If the
Exchange determines regulatory revenues exceed regulatory costs, the
Exchange will adjust the ORF by submitting a fee change filing to the
Commission.
In response to industry feedback requesting greater certainty as to
when ORF changes may occur, the Exchange proposes to specify in the Fee
Schedule that the Exchange may only increase or decrease the ORF semi-
annually, and any such fee change will be effective on the first
business day of February or August. In addition to submitting a
proposed rule change to the Commission as required by the Act to
increase or decrease the ORF, the Exchange will notify participants via
a Regulatory Circular of any anticipated change in the amount of the
fee at least 30 calendar days prior to the effective date of the
change. The Exchange believes that by providing guidance on the timing
of any changes to the ORF, the Exchange would make it easier for
participants to ensure their systems are configured to properly account
for the ORF.
The proposed change is not intended to address any other issues,
and the Exchange is not aware of any problems that Members would have
in complying with the proposed change.
2. Statutory Basis
The Exchange believes that its proposal to amend its fee schedule
is consistent with Section 6(b) of the Act \5\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed fee change is reasonable because
it would help the Exchange offset increased regulatory expenses, but
would not result in total regulatory revenue exceeding total regulatory
costs. Moreover, the Exchange believes the ORF ensures fairness by
assessing higher fees to those Members that require more Exchange
regulatory services based on the amount of customer options business
they conduct. Regulating customer trading activity is much more labor
intensive and requires greater expenditure of human and technical
resources than regulating non-customer trading activity, which tends to
be more automated and less labor-intensive. As a result, the costs
associated with
[[Page 14563]]
administering the customer component of the Exchange's overall
regulatory program are materially higher than the costs associated with
administering the noncustomer component (e.g., Member proprietary
transactions) of its regulatory program. The Exchange believes that the
proposed change to limit changes to the ORF to twice a year on specific
dates with advance notice is reasonable because it will give
participants certainty on the timing of changes, if any, and better
enable them to properly account for ORF charges among their customers.
The Exchange believes that the proposed change is equitable and not
unfairly discriminatory because it will apply in the same manner to all
Members that are subject to the ORF and provide them with additional
advance notice of changes to that fee.
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 proposed change is not
intended to address a competitive issue but rather to provide Members
with better notice of any change that the Exchange may make to the ORF.
In any event, because competitors are free to modify their own fees and
credits in response, and because market participants may readily adjust
their trading practices, the Exchange believes that the degree to which
fee or credit changes in this market may impose any burden on
competition is extremely limited. As a result of all of these
considerations, the Exchange does not believe that the proposed change
will impair the ability of Members or competing order execution venues
to maintain their competitive standing in the financial markets.
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.\7\ 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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\7\ 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-2014-10 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-MIAX-2014-10. 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 such 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-2014-10, and should be
submitted on or before April 4, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-05595 Filed 3-13-14; 8:45 am]
BILLING CODE 8011-01-P