[Federal Register Volume 79, Number 175 (Wednesday, September 10, 2014)]
[Notices]
[Pages 53792-53794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21523]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72989; File No. SR-MIAX-2014-47]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
September 4, 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 August 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 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 Fee Schedule to: (i) Adopt
transaction fees for market participants in non-Penny Pilot options
classes; (ii) provide for additional incentives for achieving certain
Priority Customer Rebate Program volume tiers; and (iii) to make a
minor technical change to delete obsolete language. The proposed
changes are based on the similar fees of other competing options
exchange.\3\
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\3\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NYSE
Amex Options Fee Schedule, p. 4; Chicago Board Options Exchange,
Incorporated, Fee Schedule, p. 2. See also Securities Exchange Act
Release No. 68556 (January 2, 2013), 78 FR 1293 (January 8, 2013)
(SR-BX-2012-074).
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The Exchange proposes to adopt transaction fees for Public
Customers that are not a Priority Customer, Non-MIAX Market Makers,
Non-Member Broker-Dealers, and Firms in non-Penny Pilot options
classes. Specifically, the Exchange proposes to assess the following
fees for transactions in non-Penny Pilot options classes: (i) Public
Customers that are not a Priority Customer, $0.32 per contract for
standard options and $0.03 per contract for mini options; (ii) Non-MIAX
Market Makers, $0.62 per contract for standard options and $0.06 per
contract for mini options; (iii) Non-Member Broker-Dealers, $0.62 per
contract for standard options and $0.06 per contract for mini options;
and (iv) Firms, $0.32 per contract for standard options and $0.03 per
contract for mini options. The Exchange notes that the transaction fees
for Priority Customers and Market Makers will not change and thus both
will continue to be charged the same amount for non-Penny Pilot options
classes and Penny Pilot options classes as they do today.
The Exchange proposes to offer MIAX Market Makers, Public Customers
that are not a Priority Customer, Non-MIAX Market Makers, Non-Member
Broker-Dealers, and Firms the opportunity to reduce transaction fees by
$0.02 per contract in standard options in non-Penny Pilot options
classes in the same manner as Penny Pilot options classes.\4\
Specifically, any Member or its affiliates of at least 75% common
ownership between the firms as reflected on each firm's Form BD,
Schedule A, that qualifies for Priority Customer Rebate Program volume
tiers 3, 4, or 5 and is a Public Customers that are not a Priority
Customer or Firm will be assessed $0.30 per contract for standard
options in non-Penny Pilot options classes. Further, any Member or its
affiliates of at least 75% common ownership between the firms as
reflected on each firm's Form BD, Schedule A, that qualifies for
Priority Customer Rebate Program volume tiers 3, 4, or 5 and is a Non-
MIAX Market Makers or Non-Member Broker-Dealers will be assessed $0.60
per contract for standard options in non-Penny Pilot options classes.
The Exchange believes that these incentives will encourage MIAX Market
Makers, Public Customers that are not a Priority Customer, Non-MIAX
Market Makers, Non-Member Broker-Dealers, and Firms to transact a
greater number of orders on the Exchange.
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\4\ See SR-MIAX-2014-46.
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The Exchange also proposes a technical change to delete an obsolete
fee and date from the Options Regulatory Fee schedule of the Fee
Schedule. The Exchange believes that this change will reduce the
potential of confusion on behalf of market participants.
The Exchange proposes to implement the new transaction fees
beginning September 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 \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 that its proposal to assess transaction fees
in non-Penny Pilot options classes, which differs from Penny Pilot
options classes, is consistent with other options markets that also
assess different transaction fees for non-Penny Pilot options classes
as compared to Penny Pilot options classes. The Exchange believes that
establishing different pricing for non-Penny Pilot options and Penny
Pilot options is reasonable, equitable, and not unfairly discriminatory
because Penny Pilot options are more liquid options as compared to non-
Penny Pilot options. Additionally, other competing options exchanges
differentiate pricing in the similar manner today.\7\
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\7\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NYSE
Amex Options Fee Schedule, p. 4; Chicago Board Options Exchange,
Incorporated, Fee Schedule, p. 2. See also Securities Exchange Act
Release No. 68556 (January 2, 2013), 78 FR 1293 (January 8, 2013)
(SR-BX-2012-074).
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The Exchange's proposal to increase the transaction fees for Public
[[Page 53793]]
Customers that are not a Priority Customer, Non-MIAX Market Makers,
Non-Member Broker-Dealers, and Firms in non-Penny Pilot options classes
is reasonable because the Exchange's fees will remain competitive with
and in the range of similar transaction fees at other options
exchanges.\8\ The Exchange's proposal to increase the transaction fees
for Public Customers that are not a Priority Customer, Non-MIAX Market
Makers, Non-Member Broker-Dealers, and Firms in non-Penny Pilot options
classes is equitable and not unfairly discriminatory because the
increase applies equally to all such market participants, in each
category of market participant. The Exchange does not assess Priority
Customers transactions fees because Priority Customer order flow
enhances liquidity on the Exchange for the benefit of all market
participants. Priority Customer liquidity benefits all market
participants by providing more trading opportunities, which attracts
Market Makers and other market participants. An increase in the
activity of these market participants in turn facilitates tighter
spreads, which may cause an additional corresponding increase in order
flow from other market participants. Market Makers are assessed lower
transaction fees as compared to Public Customers that are not a
Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers,
and Firms because they have obligations to the market and regulatory
requirements, which normally do not apply to other market
participants.\9\ They have obligations to make continuous markets,
engage in a course of dealings reasonably calculated to contribute to
the maintenance of a fair and orderly market, and not make bids or
offers or enter into transactions that are inconsistent with a course
of dealings. In addition, charging non-members higher transaction fees
is a common practice amongst exchanges because Members are subject to
other fees and dues associated with their membership to the Exchange
that do not apply to non-members. The proposed differentiation as
between Priority Customers, Market Makers, and other market
participants recognizes the differing contributions made to the
liquidity and trading environment on the Exchange by these market
participants.
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\8\ Id.
\9\ See Exchange Rules 603 and 604.
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The Exchange's proposal to offer MIAX Market Makers, Public
Customers that are not a Priority Customer, Non-MIAX Market Makers,
Non-Member Broker-Dealers, and Firms the opportunity to reduce
transaction fees by $0.02 per contract in standard options in non-Penny
Pilot options classes in the same manner as Penny Pilot options
classes, provided certain criteria are met, is reasonable because the
Exchange desires to offer all such market participants an opportunity
to lower their transaction fees. The Exchange's proposal to offer MIAX
Market Makers, Public Customers that are not a Priority Customer, Non-
MIAX Market Makers, Non-Member Broker-Dealers, and Firms the
opportunity to reduce transaction fees by $0.02 per contract in
standard options in non-Penny Pilot options classes, provided certain
criteria are met, is equitable and not unfairly discriminatory because
the Exchange will offer all market participants, excluding Priority
Customers, a means to reduce transaction fees by qualifying for volume
tiers in the Priority Customer Rebate Program. The Exchange believes
that offering all such market participants the opportunity to lower
transaction fees by incentivizing them to transact Priority Customer
order flow in turn benefits all market participants.
The Exchange believes that the proposal to allow the aggregation of
trading activity of separate Members or its affiliates for purposes of
the fee reduction is fair, equitable and not unreasonably
discriminatory. The Exchange believes the proposed rule change is
reasonable because it would allow aggregation of the trading activity
of separate Members or its affiliates for purposes of the fee reduction
only in very narrow circumstances, namely, where the firm is an
affiliate, as defined herein. Furthermore, other exchanges, as well as
MIAX, have rules that permit the aggregation of the trading activity of
affiliated entities for the purposes of calculating and assessing
certain fees. The Exchange believes that offering all such market
participants the opportunity to lower transaction fees by incentivizing
them to transact Priority Customer order flow in turn benefits all
market participants.
Finally, the Exchange believes that technical changes to delete an
obsolete fee and date from the Options Regulatory Fee schedule of the
Fee Schedule will protect investors and the public interest by
eliminating potential confusion that could be caused by the existing
language used to describe the Options Regulatory 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 proposal is similar to the
transaction fees found on other options exchanges; therefore, the
Exchange believes the proposal is consistent with robust competition by
increasing the intermarket competition for order flow from market
participants. To the extent that there is additional competitive burden
on non-member market participants, the Exchange believes that this is
appropriate because charging non-members higher transaction fees is a
common practice amongst exchanges and Members are subject to other fees
and dues associated with their membership to the Exchange that do not
apply to non-members. To the extent that there is additional
competitive burden on market participants that are not Priority
Customers or Market Makers, the Exchange believes that this is
appropriate because the proposal should incent Members to direct
additional order flow to the Exchange and thus provide additional
liquidity that enhances the quality of its markets and increases 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 order
flow directed to 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.
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
[[Page 53794]]
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-2014-47 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-2014-47. 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-2014-47 and should be
submitted on or before October 1, 2014.
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. 2014-21523 Filed 9-9-14; 8:45 am]
BILLING CODE 8011-01-P