[Federal Register Volume 80, Number 51 (Tuesday, March 17, 2015)]
[Notices]
[Pages 13938-13940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06009]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74478; File No. SR-MIAX-2015-16]
Self-Regulatory Organizations; The Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
March 11, 2015
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, 2015, 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 the MIAX Options 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 its Fee Schedule to: (i) Increase
the transaction fees for Public Customers
[[Page 13939]]
that are not a Priority Customer and Firms; and (ii) modify the
transaction fees for non-Priority Customers and Firms for achieving
certain Priority Customer Rebate Program volume tiers. 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. 6; Chicago Board Options Exchange,
Incorporated, Fee Schedule, p.1. 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 increase the transaction fees for Public
Customers that are not a Priority Customer and Firms. Specifically, the
Exchange proposes to assess the following fees for transactions for
Public Customers that are not a Priority Customer: (i) $0.47 per
contract for standard options and $0.05 per contract for mini options
in Penny Pilot options classes; and (ii) $0.62 per contract for
standard options and $0.06 per contract for mini options in non-Penny
Pilot options classes. In addition, the Exchange proposes to assess the
following fees for transactions for Firms: (i) $0.37 per contract for
standard options and $0.04 per contract for mini options in Penny Pilot
options classes; and (ii) $0.42 per contract for standard options and
$0.04 per contract for mini options in non-Penny Pilot options classes.
The Exchange proposes to continue to offer Public Customers that
are not a Priority Customer and Firms the opportunity to reduce
transaction fees by $0.02 per contract in standard options in both
Penny Pilot and non-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 Customer that are not a Priority Customer will be assessed $0.45
per contract for standard options in Penny Pilot options classes and
$0.60 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 Firm will be assessed $0.35 per contract for
standard options in Penny Pilot options classes and $0.40 per contract
in non-Penny Pilot options classes. The Exchange believes that these
incentives will encourage Public Customers that are not a Priority
Customer and Firms to transact a greater number of orders on the
Exchange.
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\4\ See Securities Exchange Release Nos. 72988 (September 4,
2014), 79 FR 53808 (September 10, 2014) (SR-MIAX-2014-46); 72989
(September 4, 2014), 79 FR 53792 (September 10, 2014) (SR-MIAX-2014-
47).
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The Exchange proposes to implement the new transaction fees
beginning March 1, 2015.
2. Statutory Basis
The Exchange believes that its proposed rule change 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's proposal to increase the transaction fees for Public
Customers that are not a Priority Customer and Firms is reasonable
because the Exchange's fees will remain competitive with fees at other
options exchanges.\7\ The Exchange's proposal to increase the
transaction fees for Public Customers that are not a Priority Customer
and Firms is equitable and not unfairly discriminatory because the
increase applies equally to all such market participants. 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.\8\ 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 Public Customer that is not a Priority Customer, Firms, 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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\7\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NASDAQ
Options Market LLC's Pricing Schedule, Chapter XV.
\8\ See Exchange Rules 603 and 604.
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The Exchange's proposal to offer Public Customers that are not a
Priority Customer and Firms the opportunity to reduce transaction fees
by $0.02 per contract in standard options, 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 Public Customers that are not a Priority
Customer and Firms the opportunity to reduce transaction fees by $0.02
per contract in standard options, 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.
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
[[Page 13940]]
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.\9\
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\9\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NYSE
Amex Options Fee Schedule, p. 6; Chicago Board Options Exchange,
Incorporated, Fee Schedule, p. 1. 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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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. The proposal more closely aligns the fees for Public
Customers that is not a Priority Customer and Firms to those of non-
MIAX Market Makers and non-Member Broker-dealers. 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 Public Customer not Priority Customers
or Firms, 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 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-2015-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
All submissions should refer to File Number SR-MIAX-2015-16. 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-2015-16 and should be
submitted on or before April 7, 2015.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Brent J. Fields,
Secretary.
[FR Doc. 2015-06009 Filed 3-16-15; 8:45 am]
BILLING CODE 8011-01-P