[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Notices]
[Pages 40798-40801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16369]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72561; File No. SR-MIAX-2014-35]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
July 8, 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 June 25, 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
[[Page 40799]]
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 amend the Fee Schedule to reduce several
testing and certification fees and System connectivity fees for non-
Members. Specifically, the Exchange proposes to: (i) Reduce the non-
Member API testing and certification fee; (ii) reduce the non-Member
networking and certification fees; (iii) eliminate the fees for non-
Members to test and certify additional connections; and (iv) reduce the
non-Member networking connectivity fee.
API Testing and Certification
The Exchange assesses a one-time Application Programming Interface
(``API'') testing and certification fee on non-Members. Specifically,
the Exchange assesses a one-time API Testing and Certification fee of
$5,000.00 on third party vendors \3\ and Service Bureaus \4\ whose
software interfaces with MIAX software. The API makes it possible for
third party vendors' and Service Bureaus' software to communicate with
MIAX software applications, and is subject to testing with, and
certification by, the Exchange. The Exchange originally established a
higher fee for non-Members to reflect the greater amount of time spent
by Exchange employees testing and certifying non-Members.\5\ Up to that
point, it had been the Exchange's experience that Member testing takes
less time than non-Member testing because Members have more experience
testing these systems with exchanges; generally fewer questions and
issues arise during the testing and certification process.\6\ Also,
because third party vendors and Service Bureaus are redistributing data
and reselling services to other Members and market participants the
number and types of scenarios that need to be tested are more numerous
and complex than those tested and certified for a single Member.\7\
Although the cost to the Exchange to provide this service to non-
Members remains higher than for Members, the Exchange proposes to
reduce the API testing and certification fee to $1,000, the same price
as EEMs in order to incent more non-Members to use the service.\8\
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\3\ Third party vendors are subscribers of MIAX's market and
other data feeds, which they in turn use for redistribution
purposes. Third party vendors do not provide connectivity and
therefore are not subject to Network testing and certification.
\4\ A Service Bureau is a technology provider that offers and
supplies technology and technology services to a trading firm that
does not have its own proprietary system. The technology and
technology services supplied by Service Bureaus includes both
software applications and connectivity, thus Service Bureaus are
subject to both API testing and certification and Network testing
and certification.
\5\ See Securities Exchange Act Release No. 68645 (January 14,
2013), 78 FR 4175 (January 18, 2013) (SR-MIAX-2012-05).
\6\ Id.
\7\ Id.
\8\ Notwithstanding the proposal reducing the fees for providing
this service to non-Members despite the higher cost, the Exchange
represents that it will continue to have adequate resources to fund
its regulatory program and fulfill its responsibilities as a self-
regulatory organization while the reduced fees are in effect.
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Non-Member Network Testing and Certification Fee
The Exchange assesses a one-time Network Testing and Certification
fee on Service Bureaus and Extranet Providers.\9\ Specifically, the
Exchange assesses a one-time Service Bureaus and Extranet Providers fee
of $2,000.00 for the initial one Gigabit connection and $1,000 for each
additional one Gigabit connection and $6,000.00 for the initial ten
Gigabit connection and $4,000.00 for each additional ten Gigabit
connection. The non-Member Network Testing and Certification fees
represent installation and support costs incurred by the Exchange as it
works with each non-Member to make sure there are appropriate
electronic connections with the Exchange. The Exchange originally
established a higher fee for non-Members to reflect the greater amount
of time spent by the Exchange employees testing and certifying non-
Members.\10\ Up to that point, it had been the Exchange's experience
that Member network connectivity testing takes less time than non-
Member network connectivity testing because Members have more
experience testing these systems with exchanges; generally fewer
questions and issues arise during the testing and certification
process.\11\ In addition, non-Members are charged a discounted Network
Testing and Certification Fee for additional connections because each
connection will be used by different customers of the non-Member
Service Bureaus and Extranet Providers and will need to be individually
tested requiring more Exchange resources for testing and certification.
Although the cost to the Exchange to provide this service to non-
Members remains higher than for Members, the Exchange proposes to
reduce the Network Testing and Certification Fee to $1,000.00 per
Member [sic] for a one Gigabit connection, and $4,000.00 per Member
[sic] for a ten Gigabit connection in order to incent more non-Members
to use the service.\12\ In addition, the Exchange proposes not to
charge non-Members a Testing and Certification Fee for any additional
connections they obtain. This will align the pricing of these services
for non-Members with the current charges for Members.
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\9\ An Extranet Provider is a technology provider that connects
with MIAX systems and in turn provides such connectivity to MIAX
participants that do not connect directly with MIAX. Extranet
Providers do not provide software interfaces with MIAX software
applications, thus Extranet Providers are not subject to API testing
and certification.
\10\ Id.
\11\ Id.
\12\ Notwithstanding the proposal reducing the fees for
providing this service to non-Members despite the higher cost, the
Exchange represents that it will continue to have adequate resources
to fund its regulatory program and fulfill its responsibilities as a
self-regulatory organization while the reduced fees are in effect.
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Non-Member Network Connectivity Fees
The Exchange assesses fees to Service Bureaus, and Extranet
Providers for electronic connections \13\ between those entities and
the Exchange. The Connectivity fees are based upon the amount of
bandwidth that will be used by the Service Bureau, or Extranet
Provider. Specifically, the Exchange
[[Page 40800]]
assesses a monthly non-Member Network Connectivity fee to Service
Bureaus and Extranet Providers of $2,000.00 for a one Gigabit
connection, and $10,000.00 for a ten Gigabit connection. The Exchange
originally established a higher fee to Service Bureaus and Extranet
Providers than to Members to reflect the fact that Service Bureaus and
Extranet Providers serve as conduits to MIAX Members and non-Members
that do not have their own proprietary systems or do not directly
connect to MIAX. The Service Bureaus and Extranet Providers recover the
cost of the MIAX Network Connectivity fee from their customers,
resulting in a lower overall fee to Members and non-Members using the
services of such third party providers. Although the cost to the
Exchange to provide this service to non-Members remains higher than for
Members, the Exchange proposes to lower the monthly non-Member Network
Connectivity fee for Service Bureaus and Extranet Providers to
$1,000.00 for a one Gigabit connection, and $5,000.00 for a ten Gigabit
connection, the level as currently charged to Members in order to
incent more non-Members to use the service.\14\
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\13\ For purposes of this proposed rule change, the terms
``connectivity'' and ``connections'' refer to the physical
connections between Member and non-Member electronic networks and
the MIAX systems.
\14\ Notwithstanding the proposal reducing the fees for
providing this service to non-Members despite the higher cost, the
Exchange represents that it will continue to have adequate resources
to fund its regulatory program and fulfill its responsibilities as a
self-regulatory organization while the reduced fees are in effect.
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The Exchange proposes to implement the new fee beginning July 1,
2014.
2. Statutory Basis
The Exchange believes that its proposal to amend its fee schedule
is consistent with Section 6(b) of the Act \15\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \16\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed fees are a reasonable allocation
of its costs and expenses among its Members and other persons using its
facilities since it is recovering the costs associated with providing
such infrastructure testing and certification services, and with
offering access through the network connections and access and services
through the Ports, responding to customer requests, configuring MIAX
systems, programming API user specifications and administering the
various services connectivity services. Access to the Exchange is
provided on fair and non-discriminatory terms. The proposed fees are
reasonable since they are in the range of similar fees charged by
another exchange. The Exchange believes the proposed fees are equitable
and not unfairly discriminatory because the new fee levels result in a
more reasonable and equitable allocation of fees amongst non-Members
and Members for similar services.
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 proposal will allow the
Exchange to reduce non-Member fees to align them with similar fees
charged to Member and thus should promote competition amongst these
participants for these types of services. The proposal also reduces
fees in a manner that should improve competition with another competing
exchange by changing its rate to the same level. 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.
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.\17\ 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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\17\ 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-2014-35 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-2014-35. 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-2014-35 and should be
submitted on or before August 4, 2014. For the Commission, by the
Division of Trading
[[Page 40801]]
and Markets, pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16369 Filed 7-11-14; 8:45 am]
BILLING CODE 8011-01-P