[Federal Register Volume 80, Number 237 (Thursday, December 10, 2015)]
[Notices]
[Pages 76716-76719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31065]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76557; File No. SR-MIAX-2015-65]
Self-Regulatory Organizations: Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend Its Fee Schedule
December 4, 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 November 30, 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 ``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 modify the
monthly volume thresholds in Tiers 2 and 3 in the Priority Customer
Rebate Program (the ``Program'').\3\
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\3\ See Securities Exchange Act Release Nos. 76098 (October 7,
2015), 80 FR 61866 (October 14, 2015) (SR-MIAX-2015-58); 75856
(September 8, 2015), 80 FR 55158 (September 14, 2015) (SR-MIAX-2015-
53); 75631 (August 6, 2015), 80 FR 48382 (August 12, 2015) (SR-MIAX-
2015-51); 74758 (April 17, 2015), 80 FR 22756 (April 23, 2015) (SR-
MIAX-2015-27); 74007 (January 9, 2015), 80 FR 1537 (January 12,
2015) (SR-MIAX-2014-69); 72799 (August 8, 2014), 79 FR 47698 (August
14, 2014) (SR-MIAX-2014-40); 72355 (June 10, 2014), 79 FR 34368
(June 16, 2014) (SR-MIAX-2014-25); 71698 (March 12, 2014), 79 FR
15185 (March 18, 2014) (SR-MIAX-2014-12); 71283 (January 10, 2014),
79 FR 2914 (January 16, 2014) (SR-MIAX-2013-63); 71009 (December 6,
2013), 78 FR 75629 (December 12, 2013) (SR-MIAX-2013-56).
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Priority Customer Rebate Program
Currently, the Exchange credits each Member the per contract amount
resulting from each Priority Customer \4\ order transmitted by that
Member that is executed electronically on the Exchange in all multiply-
listed option classes (excluding Qualified Contingent Cross Orders,\5\
mini-options,\6\ Priority Customer-to-Priority Customer Orders, PRIME
Auction Or Cancel Responses, PRIME Contra-side Orders, PRIME Orders for
which both the Agency and Contra-side Order are Priority Customers,\7\
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), provided the Member
meets certain tiered percentage thresholds in a month as described in
the Priority Customer Rebate Program table.\8\ For each Priority
Customer order transmitted by that Member which is executed
electronically on the Exchange in MIAX Select Symbols, MIAX will
continue to credit each member at the separate per contract rate for
MIAX Select Symbols.\9\ For each Priority Customer order submitted into
the PRIME Auction as a PRIME Agency
[[Page 76717]]
Order, MIAX will continue to credit each member at the separate per
contract rate for PRIME Agency Orders.\10\ The volume thresholds are
calculated based on the customer volume over the course of the month.
Volume will be recorded for and credits will be delivered to the Member
Firm that submits the order to the Exchange.
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\4\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 order in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100.
\5\ A Qualified Contingent Cross Order is comprised of an
originating order to buy or sell at least 1,000 contracts, or 10,000
mini-option contracts, that is identified as being part of a
qualified contingent trade, as that term is defined in
Interpretations and Policies .01 below, coupled with a contra-side
order or orders totaling an equal number of contracts. A Qualified
Contingent Cross Order is not valid during the opening rotation
process described in Rule 503. See Exchange Rule 516(j).
\6\ A mini-option is a series of option contracts with a 10
share deliverable on a stock, Exchange Traded Fund share, Trust
Issued Receipt, or other Equity Index-Linked Security. See Exchange
Rule 404, Interpretations and Policies .08.
\7\ The MIAX Price Improvement Mechanism (``PRIME'') is a
process by which a Member may electronically submit for execution
(``Auction'') an order it represents as agent (``Agency Order'')
against principal interest, and/or an Agency Order against solicited
interest. For a complete description of PRIME and of PRIME order
types and responses, see Exchange Rule 515A.
\8\ See MIAX Fee Schedule Section (1)(a)(iii).
\9\ See Securities Exchange Release Nos. 75631 (August 6, 2015),
80 FR 48382 (August 12, 2015) (SR-MIAX-2015-51), 74291 (February 18,
2015), 80 FR 9841 (February 24, 2015) (SR-MIAX-2015-09); 74288
(February 18, 2015), 80 FR 9837 (February 24, 2015) (SR-MIAX-2015-
08); 71700 (March 12, 2014), 79 FR 15188 (March 18, 2014) (SR-MIAX-
2014-13); 72356 (June 10, 2014), 79 FR 34384 (June 16, 2014) (SR-
MIAX-2014-26); 72567 (July 8, 2014), 79 FR 40818 (July 14, 2014)
(SR-MIAX-2014-34); 73328 (October 9, 2014), 79 FR 62230 (October 16,
2014) (SR-MIAX-2014-50).
\10\ See Securities Exchange Release Nos. 75408 (July 9, 2015)
80 Fr 41530 (July 15, 2015) (SR-MIAX-2015-45); 72943 (August 28,
2014), 79 FR 52785 (September 4, 2014) (SR-MIAX-2014-45).
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The amount of the rebate is calculated beginning with the first
executed contract at the applicable threshold per contract credit with
rebate payments made at the highest achieved volume tier for each
contract traded in that month. For example, under the current Program,
a Member that executes a number of Priority Customer contracts above
1.75% of the national customer volume in multiply-listed options during
a particular calendar month, such Member will currently receive a
credit of $0.21 for each Priority Customer contract (other than Select
Symbols) executed during that month, even though there are lower
incremental percentages for lower volume tiers leading up to the 1.75%
volume threshold.
The current Priority Customer Rebate Program table designates the
following monthly volume tiers and corresponding per contract credits:
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Per contract
Percentage thresholds of national customer volume in multiply- Per contract Per contract credit for
listed options classes listed on MIAX (monthly) credit credit in MIAX prime agency
select symbols order
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0.00-0.50%...................................................... $0.00 $0.00 $0.10
Above 0.50-1.00................................................. 0.10 0.10 0.10
Above 1.00-1.75................................................. 0.15 0.20 0.10
Above 1.75...................................................... 0.21 0.24 0.10
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Proposal
The Exchange proposes to amend Section (1)(a)(iii) of its Fee
Schedule to reflect a new schedule of percentage thresholds of national
customer volume. Specifically, the new thresholds will be as set forth
in the following table:
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Per contract
Percentage thresholds of national customer volume Per contract Per contract credit for
in multiply-listed options classes listed on MIAX credit credit in MIAX prime agency
(monthly) select symbols order
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0.00-0.50%........................................ $0.00 $0.00 $0.10
Above 0.50-1.20................................... 0.10 0.10 0.10
Above 1.20-1.75................................... 0.15 0.20 0.10
Above 1.75........................................ 0.21 0.24 0.10
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The Exchange believes that the proposed new monthly volume tiers
should provide incentives for Members to direct greater Priority
Customer trade volume to the Exchange.
MIAX Select Symbols
The proposed new monthly volume thresholds will apply to multiply
listed options classes, including MIAX Select Symbols.\11\ The Tier 2
per contract credit volume threshold will now extend from above 0.50%
to 1.20%. The effect of this is that Members must still execute [sic]
0.50% of the national customer volume in a particular class in order to
qualify for the Tier 2 per contract credit, and must now exceed 1.20%
of the national customer volume in the affected class in order to
receive the Tier 3 per contract credit. The Tier 3 volume threshold
will now extend from above 1.20% to 1.75%. The Tier 4 volume threshold
of above 1.75% will be unchanged.
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\11\ The term ``MIAX Select Symbols'' means options overlying
AA, AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BBRY, BIDU, BP, C,
CAT, CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD,
GM, GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO,
MRK, NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY,
SUNE, T, TSLA, USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF,
XLP, XOM, XOP and YHOO. See Fee Schedule, note 13.
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All other aspects of the Program will remain unchanged. The
Exchange is not proposing any change to the per contract credit for
PRIME Agency Orders. Consistent with the current Fee Schedule, the
Exchange will continue to aggregate the contracts resulting from
Priority Customer orders transmitted and executed electronically on the
Exchange from affiliated Members for purposes of the thresholds above,
provided there is at least 75% common ownership between the firms as
reflected on each firm's Form BD, Schedule A. In the event of a MIAX
System outage or other interruption of electronic trading on MIAX, the
Exchange will adjust the national customer volume in multiply-listed
options for the duration of the outage. A Member may request to receive
its credit under the Priority Customer Rebate Program as a separate
direct payment.
The purpose of the proposed rule change is to encourage Members to
direct greater Priority Customer trade volume to the Exchange. The
Exchange believes that increased Priority Customer volume will attract
more liquidity to the Exchange, which benefits all market participants.
Increased retail customer order flow should attract professional
liquidity providers (Market Makers), which in turn should make the MIAX
marketplace an attractive venue where Market Makers will submit narrow
quotations with greater size, deepening and enhancing the quality of
the MIAX marketplace. This should provide more trading opportunities
and tighter spreads for other market participants and result in a
corresponding increase in order flow from such other market
participants.
The specific volume thresholds of the Program's tiers are set based
upon business determinations and an analysis
[[Page 76718]]
of current volume levels. The volume thresholds are intended to
incentivize firms to increase the number of Priority Customer orders
they send to the Exchange so that they can achieve the next threshold,
and to encourage new participants to send Priority Customer orders as
well. Increasing the number of orders sent to the Exchange will in turn
provide tighter and more liquid markets, and therefore attract more
business overall. Similarly, the different credit rates at the
different tier levels are based on an analysis of current revenue and
volume levels and are intended to provide increasing ``rewards'' to
MIAX participants for increasing the volume of Priority Customer orders
sent to, and Priority Customer contracts executed on, the Exchange. The
specific amounts of the tiers and rates are set in order to encourage
suppliers of Priority Customer order flow to reach for higher tiers.
The credits paid out as part of the program will be drawn from the
general revenues of the Exchange.\12\ The Exchange calculates volume
thresholds on a monthly basis. The proposed changes to the Fee Schedule
will be operative as of December 1, 2015.
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\12\ Despite providing credits under the Program, the Exchange
represents that it will continue to have adequate resources to fund
its regulatory program and fulfill its responsibilities as a self-
regulatory organization while the Program is in effect.
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2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \13\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \14\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that the proposal is fair, equitable and not
unreasonably discriminatory. The Program and the proposed new tier
structure should improve market quality for all market participants.
The proposed changes to the Program are fair and equitable and not
unreasonably discriminatory because they apply equally to all Priority
Customer orders. 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. 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 all Exchange participants by providing more
trading opportunities and tighter spreads.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed change would increase both intermarket and
intramarket competition by encouraging Members to direct their Priority
Customer orders to the Exchange, which should enhance the quality of
quoting and increase the volume of contracts traded on MIAX. Respecting
the competitive position of non-Priority Customers, the Exchange
believes that this rebate program should provide additional liquidity
that enhances the quality of its markets and increases the number of
trading opportunities on MIAX for all participants, including non-
Priority Customers, who will be able to compete for such opportunities.
This should 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 and rebates
to remain competitive with other exchanges and to attract order flow to
the Exchange. The Exchange believes that the proposed rule change
reflects this competitive environment because it encourages market
participants to direct their customer order flow, to provide liquidity,
and to attract additional transaction volume to the Exchange. Given the
robust competition for volume among options markets, many of which
offer the same products, enhancing the existing volume based customer
rebate program to attract order flow is consistent with the goals of
the Act. The Exchange believes that the proposal will enhance
competition, because market participants will have another additional
pricing consideration in determining where to execute orders and post
liquidity if they factor the benefits of the proposed rebate program
into the determination.
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,\15\ and Rule 19b-4(f)(2) \16\ thereunder.
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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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
\16\ 17 CFR 240.19b-4(f)(2).
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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-2015-65 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-2015-65. 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
[[Page 76719]]
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-2015-65 and should be
submitted on or before December 31, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31065 Filed 12-9-15; 8:45 am]
BILLING CODE 8011-01-P