[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Notices]
[Pages 16048-16049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06888]
[[Page 16048]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74554; File No. SR-MIAX-2015-21]
Self-Regulatory Organizations; Miami International Securities
Exchange, LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
March 20, 2015.
Pursuant to 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 March 11, 2015, Miami International Securities Exchange, LLC
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange
Commission (``SEC'' or ``Commission'') the 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 provide for
additional incentives for achieving certain Priority Customer Rebate
Program volume tiers and sending additional Priority Customer Orders
into PRIME.
The Exchange proposes to offer Members the opportunity to qualify
for a $0.02 per contract rebate in standard options if the Member or
its affiliates of at least 75% common ownership between the firms as
reflected on each firm's Form BD, Schedule A, qualifies in a given
month for Priority Customer Rebate Program volume tiers 3, 4, or 5 in
the Fee Schedule.\3\ 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 will be credited an additional $0.02
per contract for each Priority Customer order executed in the PRIME
Auction as a PRIME Agency Order over a threshold of 1,500,000 contracts
in a month. Volume will be recorded for and credits will be delivered
to the Member Firm that submits the order to MIAX. The $0.02 per
contract credit would be in addition to the $0.10 per contract credit
that currently applies to the PRIME Agency Order transactions that are
Priority Customers. The Exchange proposes to exclude from this
additional rebate and its volume threshold calculation orders executed
as mini-options, Priority Customer-to-Priority Customer Orders, PRIME
AOC Responses, PRIME Contra-side Orders, PRIME Orders for which both
the Agency and Contra-side Order are Priority Customers, and executions
related to contracts that are routed to one or more exchanges in
connection with the Options Order Protection and Locked/Crossed Market
Plan referenced in MIAX Rule 1400. The Exchange notes that these
exclusions are identical to the exclusions that are currently found in
the Priority Customer Rebate Program and that also apply to the per
contract credit for PRIME Agency Orders.\4\
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\3\ See MIAX Options Fee Schedule, Section 1)a)iii).
\4\ See id.
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The Exchange believes that these incentives will encourage Members
to transact a greater number of orders on the Exchange.
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 the proposed Priority Customer Rebate
Program rebates for Priority Customer orders submitted into PRIME are
fair, equitable and not unreasonably discriminatory. The rebate program
is reasonably designed because it will incent providers of Priority
Customer order flow to send that Priority Customer order flow to the
Exchange in order to receive a credit in a manner that enables the
Exchange to improve its overall competitiveness and strengthen its
market quality for all market participants. The proposed rebate program
is fair, equitable, and not unreasonably discriminatory because it will
apply equally to all Priority Customer orders submitted as a PRIME
Agency Order. All similarly situated Priority Customer orders are
subject to the same rebate schedule, and access to the Exchange is
offered on terms that are not unfairly discriminatory. In addition, the
proposed rebate program is equitable and not unfairly discriminatory
because, while only Priority Customer order flow qualifies for the
rebate program, an increase in Priority Customer order flow will bring
greater volume and liquidity, which benefit all market participants by
providing more trading opportunities and tighter spreads. Market
participants want to trade with Priority Customer order flow. To the
extent Priority Customer order flow is increased by the proposal,
market participants will increasingly compete for the opportunity to
trade on the Exchange including sending more orders and providing
narrower and larger sized quotations in the effort to trade with such
Priority Customer order flow. The resulting increased volume and
liquidity will benefit those Members who receive the lower tier levels,
or do not qualify for the rebate program at all, by providing more
trading opportunities and tighter spreads.
The Exchange believes excluding Priority Customer-to-Priority
Customer Orders, Priority Customer responses, contra-side orders, and
Priority Customer-to-Priority Customer PRIME transactions from the
number of options contracts executed on the Exchange by any Member for
purposes of the volume threshold and the rebate program is reasonable,
equitable, and not unfairly discriminatory because participating
Members could otherwise game the rebate program and volume thresholds
by executing excess volumes in these types of transactions in which no
transaction fees are charged on the Exchange. Further, the Exchange
[[Page 16049]]
believes that excluding these PRIME transactions from the volume
calculation is reasonable, equitable, and not unfairly discriminatory
because the rebate program was established prior to the introduction of
the PRIME Auction based on non-auction transaction fee and volume
calculations. In contrast, the Exchange proposes to target new volume
to the Exchange to compete with electronic price improvement mechanisms
on other exchanges. The Exchange believes that the new rebate for
Priority Customer agency orders in the PRIME Auction is reasonably
designed to incentivize additional retail customer order flow to the
PRIME Auction.
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.\7\ 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.
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\7\ See e.g., Chicago Board Options Exchange, Incorporated, Fee
Schedule, p. 13; NYSE Amex Options Fee Schedule, p. 12.
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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 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 market
participants without Priority Customer order flow and those market
participants that are not able to aggregate order flow with affiliates,
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.\8\ 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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\8\ 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-2015-21 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-2015-21. 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 offices 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-2015-21,
and should be submitted on or before April 16, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06888 Filed 3-25-15; 8:45 am]
BILLING CODE 8011-01-P