[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Notices]
[Pages 40807-40809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16371]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72565; File No. SR-MIAX-2014-31]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule Regarding the MIAX
Market Maker Sliding Scale for Transaction Fees
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
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
[[Page 40808]]
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 amend its current MIAX Market Maker\3\
sliding scale for transaction fees to increase the volume thresholds of
each tier.\4\
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\3\ ``MIAX Market Maker'' for purposes of the proposed sliding
scale means any MIAX Market Maker including RMM, LMM, PLMM, DLMM,
and DPLMM.
\4\ See Securities Exchange Act Release No. 71704 (March 12,
2014), 79 FR 15183 (March 18, 2014) (SR-MIAX-2014-11).
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The sliding scale for MIAX Market Maker transaction fees is based
on the substantially similar fees of the Chicago Board Options
Exchange, Incorporated (``CBOE'').\5\ Specifically, the program reduces
a MIAX Market Maker's per contract transaction fee based on the number
of contracts the MIAX Market Maker trades in a month, based on the
following scale:
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\5\ See Securities Exchange Act Release Nos. 55193 (January 30,
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 57191
(January 24, 2008), 73 FR 5611 (January 30, 2008); 58321 (August 6,
2008), 73 FR 46955 (SR-CBOE-2008-78). See also CBOE Fees Schedule,
p. 3.
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Transaction fee
Tier Contracts per month per contract
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1.............................................................. 1-1,000,000 $0.15
2.............................................................. 1,000,001-2,000,000 0.10
3.............................................................. 2,000,001-4,000,000 0.05
4.............................................................. 4,000,001+ 0.03
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The sliding scale would apply to all MIAX Market Makers for
transactions in all products except Mini Options. A MIAX Market Maker's
initial $0.15 per contract rate will be reduced if the MIAX Market
Maker reaches the volume thresholds set forth in the sliding scale in a
month. As a MIAX Market Maker's monthly volume increases, its per
contract transaction fee would decrease. Under the sliding scale, the
first 1,000,000 contracts traded in a month would be assessed at $0.15
per contract. The next 1,000,000 contracts traded (up to 2,000,000
total contracts traded) would be assessed at $0.10 per contract. The
next 2,000,000 contracts traded (up to 4,000,000 total contracts
traded) would be assessed at $0.05 per contract. All contracts above
4,000,000 contracts traded in a month would be assessed at $0.03 per
contract. The Exchange will aggregate the trading activity of separate
MIAX Market Maker firms for the purposes of the sliding scale if there
is at least 75% common ownership between the firms as reflected on each
firm's Form BD, Schedule A.\6\
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\6\ A MIAX Market Maker's monthly contract volume would be
determined at the firm affiliated level. E.g., if five MIAX Market
Maker individuals are affiliated with member firm ABC as reflected
by Exchange records for the entire month, all the volume from those
five individual MIAX Market Makers will count towards firm ABC's
sliding scale transaction fees for that month. CBOE also aggregates
volume of market maker firms with at least 75% common ownership
between the firms. See Securities Exchange Act Release No. 55193
(January 30, 2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-
111). See also CBOE Fees Schedule, p. 3.
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The Exchange believes the proposed sliding scale is objective in
that the fee reductions are based solely on reaching stated volume
thresholds. The specific volume thresholds of the tiers were set based
upon business determinations and an analysis of current volume levels.
The specific volume thresholds and rates were set in order to encourage
MIAX Market Makers to reach for higher tiers. The Exchange believes
that the proposed changes to the tiered fee schedule may incent firms
to display their orders on the Exchange and increase the volume of
contracts traded here.
As mentioned above, the Exchange notes that the proposed sliding
fee scale for MIAX Market Makers structured on contract volume
thresholds is based on the substantially similar fees of the CBOE.\7\
The Exchange also notes that a number of other exchanges have tiered
fee schedules which offer different transaction fee rates depending on
the monthly ADV of liquidity providing executions on their
facilities.\8\
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\7\ See Securities Exchange Act Release Nos. 55193 (January 30,
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 58321
(August 6, 2008), 73 FR 46955 (SR-CBOE-2008-78); 71295 (January 14,
2014), 79 FR 3443 (January 21, 2014) (SR-CBOE-2013-129).
\8\ See, e.g., International Securities Exchange, LLC, Schedule
of Fees, Section VI, C; NASDAQ Options Market, Chapter XV, Section
2.
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The proposed changes will become operative on 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 \9\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \10\ in particular, in
that it is an equitable allocation of reasonable fees and other charges
among Exchange members.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4).
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The proposed volume based discount fee structure is not
discriminatory in that all MIAX Market Makers are eligible to submit
(or not submit) liquidity, and may do so at their discretion in the
daily volumes they choose during the course of the billing period. All
similarly situated MIAX Market Makers are subject to the same fee
structure, and access to the Exchange is offered on terms that are not
unfairly discriminatory. Volume based discounts have been widely
adopted by options and equities markets, and are equitable because they
are open to all MIAX Market Makers on an equal basis and provide
discounts that are reasonably related to the value of an exchange's
market quality associated with higher volumes. The proposed fee levels
and volume thresholds are reasonably designed to be comparable to those
of other options exchanges employing similar fee programs, and also to
attract additional liquidity and order flow to the Exchange.
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 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
[[Page 40809]]
Exchange believes that the proposed rule change reflects this
competitive environment because it modifies the Exchange's fees in a
manner that encourages market participants to provide liquidity and to
send order flow to the Exchange.
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.\11\ 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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\11\ 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-2014-31 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-2014-31. 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-2014-31 and should be
submitted on or before August 4, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16371 Filed 7-11-14; 8:45 am]
BILLING CODE 8011-01-P