[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Notices]
[Pages 16044-16046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06889]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74555; File No. SR-MIAX-2015-20]
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 current MIAX Market Maker \3\
sliding scale for transaction fees to: (i) Adopt transaction fees for
non-Penny Pilot options classes; and (ii) provide for additional
incentives for achieving certain Priority Customer Rebate Program
volume tiers.
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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.
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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'').\4\ Currently, the program reduces a
MIAX Market Maker's per contract transaction fee based on percentages
of total national Market Maker volume of any options classes that trade
on the exchange during the calendar month, based on the following
scale:
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\4\ 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. The Exchange notes that CBOE does not charge market makers a
differentiated transaction fee for non-Penny Pilot option classes.
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Transaction
Tier Percentage of national fee per
Market Maker volume contract
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1............................. 0.00%-0.05%................ $0.25
2............................. Above 0.05%-0.50%.......... 0.17
3............................. Above 0.50%-0.80%.......... 0.12
4............................. Above 0.80%-1.50%.......... 0.07
5............................. Above 1.50%................ 0.05
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The Exchange proposes to amend its current MIAX Market Maker
sliding scale for transactions to adopt transaction fees for non-Penny
Pilot options classes. Specifically, the Exchange proposes to reduce a
MIAX Market Maker's per contract transaction fee based on percentages
of total national Market Maker volume of any options classes that trade
on the exchange during the calendar month, based on the following
scale:
------------------------------------------------------------------------
Non-Penny
Pilot
Percentage of national classes
Tier Market Maker volume transaction
fee per
contract
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1............................. 0.00%-0.05%................ $0.29
2............................. Above 0.05%-0.50%.......... 0.21
3............................. Above 0.50%-0.80%.......... 0.16
4............................. Above 0.80%-1.50%.......... 0.11
5............................. Above 1.50%................ 0.09
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The proposed sliding scale would apply to all MIAX Market Makers
for transactions in all non-Penny Pilot options classes except mini-
options. A MIAX Market Maker's initial $0.29 per contract rate will be
reduced if the MIAX Market Maker reaches the volume thresholds set
forth in the sliding scale
[[Page 16045]]
in a month. As a MIAX Market Maker's monthly volume increases, its per
contract transaction fee would decrease. The Market Maker sliding scale
will continue to apply to MIAX Market Maker (RMM, LMM, DLMM, PLMM,
DPLMM) transaction fees in all non-Penny Pilot options classes except
mini-options. MIAX Market Makers will continue to be assessed a $0.02
per executed contract fee for transactions in mini-options. The
Exchange notes that MIAX Market Makers will continue to be assessed
transactions fees for Penny Pilot options classes pursuant to the
current Market Maker sliding scale.\5\
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\5\ See MIAX Options Fee Schedule, Section 1(a)(i).
Specifically, MIAX Market Makers will be assessed $0.25 per contract
for tier 1, $0.17 per contract for tier 2, $0.12 per contract for
tier 3, $0.07 per contract for tier 4, and $0.05 per contract for
tier 5 for transactions in standard options in Penny Pilot options
classes as currently provided in the Market Maker sliding scale.
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The Exchange believes the proposed sliding scale for non-Penny
Pilot options classes 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 in order to
qualify for lower fee rates in the higher tiers.
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.\6\
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.\7\
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\6\ 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). The
Exchange notes that CBOE does not charge market makers a
differentiated transaction fee for non-Penny Pilot option classes.
\7\ See, e.g., International Securities Exchange, LLC, Schedule
of Fees, Section IV, C; NASDAQ Options Market, Chapter XV, Section
2.
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The Exchange proposes to offer MIAX Market Makers 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. As proposed, 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 MIAX Market Maker will be assessed
$0.27 per contract for tier 1, $0.19 per contract for tier 2, $0.14 per
contract for tier 3, $0.09 per contract for tier 4, and $0.07 per
contract for tier 5 for transactions in standard options in non-Penny
Pilot options classes in lieu of the applicable transaction fees in the
Market Maker sliding scale.
The Exchange believes that these incentives will encourage MIAX
Market Makers 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 \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable fees and other charges
among Exchange members.
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\8\ 15 U.S.C. 78f(b).
\9\ 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 a similar manner today in other types of
transaction fees.\10\
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\10\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II
(assessing differentiated transaction fees for Penny Pilot and non-
Penny Pilot options classes); NYSE Amex Options Fee Schedule, p. 6
(assessing differentiated transaction fees for Penny Pilot and non-
Penny Pilot options classes); Chicago Board Options Exchange,
Incorporated, Fee Schedule, p. 1 (assessing differentiated
transaction fees for Penny Pilot and non-Penny Pilot options
classes). See also Securities Exchange Act Release No. 68556
(January 2, 2013), 78 FR 1293 (January 8, 2013) (SR-BX-2012-074).
Please note that neither of these exchanges currently has
differentiated pricing for non-Penny Pilot options classes in a
tiered volume scale for market makers.
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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.
The Exchange's proposal to provide MIAX Market Makers the
opportunity to reduce transaction fees by $0.02 per contract in
standard options in non-Penny Pilot option 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 the
opportunity to reduce transaction fees by $0.02 per contract in
standard options in non-Penny Pilot option classes, provided certain
criteria are met, is equitable and not unfairly discriminatory because
the Exchange offers 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.
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 Exchange believes that the
proposed rule change reflects this competitive environment because it
modifies the Exchange's fees in a manner that
[[Page 16046]]
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-2015-20 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-2015-20. 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-2015-20,
and should be submitted on or before April 16, 2015.
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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Brent J. Fields,
Secretary.
[FR Doc. 2015-06889 Filed 3-25-15; 8:45 am]
BILLING CODE 8011-01-P