[Federal Register Volume 81, Number 130 (Thursday, July 7, 2016)]
[Notices]
[Pages 44390-44393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16122]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78222; File No. SR-MIAX-2016-18]
Self-Regulatory Organizations; Miami International Securities
Exchange LLC; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the MIAX Options Fee Schedule
July 1, 2016.
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 June 28, 2016, 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 and II 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 (``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 clarify the
circumstances that trigger the assessment of fees to, and billing of,
Member or Non-Member users of the Exchange's System \3\ for certain
non-transactional fees, as set forth below. The Exchange is not
proposing any new fees that are not currently charged; the Exchange is
simply proposing to clarify that the Exchange will assess the fees only
when the Member or Non-Member user is credentialed (as defined below)
to use the System in the production environment, thus ensuring that
Member and Non-Member users of the System are not billed unnecessarily
before they are ready to begin using the System. The Exchange is also
proposing several technical clarifying amendments to the Fee Schedule
as described below.
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\3\ The term ``System'' means the automated trading system used
by the Exchange for the trading of securities. See Exchange Rule
100.
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New users of the System (and existing users of the System that seek
to add connectivity) require testing and certification prior to actual
use in the production environment. It has been the Exchange's
experience that such users frequently must engage in internal business
and technological decision-making and production processes that extend
beyond the timing of their application, testing and certification with
the Exchange for use of the System in the production environment. In
order to ensure that Member and Non-Member users of the System are not
assessed fees and billed unnecessarily during this time, the Exchange
is proposing the below changes to the Fee Schedule relating to the
timing of such assessment and billing.
The Exchange proposes to amend Section 3)a) of the Fee Schedule to
provide that MIAX will assess a one-time Membership Application Fee on
the earlier of (i) the date the applicant is certified in the
membership system, or (ii) once an application for MIAX membership is
finally denied.
The Exchange also proposes to amend Section 3)b) of the Fee
Schedule to provide that Monthly Trading Permit Fees will be assessed
with respect to Electronic Exchange Members (``EEMs'') \4\ (other than
Clearing Firms) in any month the EEM is certified in the membership
system and the EEM is authorized by the Exchange (hereinafter,
``credentialed'') to use one or more Financial Information Exchange
(``FIX'') Ports \5\ in the production environment. Further, the
Exchange proposes that Monthly Trading Permit Fees will be assessed
with respect to EEM-Clearing Firms in any month the Clearing Firm is
certified in the membership system to clear transactions on the
Exchange. Finally, the Exchange proposes that Monthly Trading Permit
Fees will be assessed with respect to Market Makers in any month the
Market Maker is certified in the membership system, is credentialed to
use one or more MIAX Express Interface (``MEI'') \6\ Ports in the
production environment and is assigned to quote in one or more
classes.\7\
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\4\ The term ``Electronic Exchange Member'' means the holder of
a Trading Permit who is not a Market Maker. Electronic Exchange
Members are deemed ``members'' under the Exchange Act. See Exchange
Rule 100.
\5\ A FIX Port is an interface with MIAX systems that enables
the Port user (typically an Electronic Exchange Member or a Market
Maker) to submit orders electronically to MIAX.
\6\ MIAX Express Interface is a connection to MIAX systems that
enables Market Makers to submit electronic quotes to MIAX.
\7\ The calculation of the Trading Permit Fee for the first
month in which the Trading Permit is issued will be pro-rated based
on the number of trading days on which the Trading Permit was in
effect divided by the total number of trading days in that month
multiplied by the monthly rate.
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The Exchange also proposes to amend Section 4)a) of the Fee
Schedule to state that Application Programming Interface (``API'')
Testing and Certification Fees for EEMs (other than Clearing Firms)
will be assessed (i) initially per API for FIX, FIX Drop Copy (``FXD'')
\8\ and Clearing Trade Drop (``CTD'') \9\ in the month the EEM has been
credentialed to use one or more ports in the production
[[Page 44391]]
environment for the tested API,\10\ and (ii) each time an EEM initiates
a change to its system that requires testing and certification. The
Exchange further proposes that API Testing and Certification Fees for
EEM-Clearing Firms will be assessed (i) initially per API in the month
the EEM-Clearing Firm has been credentialed to use one or more CTD
ports in the production environment, and (ii) each time an EEM-Clearing
Firm initiates a change to its system that requires testing and
certification. The Exchange additionally proposes that API Testing and
Certification Fees for Market Makers will be assessed (i) initially per
API for CTD and MEI \11\ in the month the Market Maker has been
credentialed to use one or more ports in the production environment for
the tested API and the Market Maker has been assigned to quote in one
or more classes, and (ii) each time a Market Maker initiates a change
to its system that requires testing and certification. Consistent with
the current practice, such fees will not be assessed in situations
where the Exchange initiates a change to its System requiring testing
and certification by Members of the Exchange. The Exchange is proposing
to clarify that the fees will not be assessed when the Exchange-
initiated change is mandatory.
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\8\ The FIX Drop Copy Port is a messaging interface that will
provide a copy of real-time trade execution, trade correction and
trade cancellation information to FIX Drop Copy Port users who
subscribe to the service.
\9\ CTD provides Exchange members with real-time clearing trade
updates. The updates include the member's clearing trade messages on
a low latency, real-time basis. The trade messages are routed to a
member's connection containing certain information. The information
includes, among other things, the following: (i) Trade date and
time; (ii) symbol information; (iii) trade price/size information;
(iv) member type (for example, and without limitation, Market Maker,
Electronic Exchange Member, Broker-Dealer); and (v) Exchange Member
Participant Identifier (``MPID'') for each side of the transaction,
including clearing member MPID.
\10\ FIX, FXD and CTD are types of APIs.
\11\ MEI is a type of API.
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The Exchange also proposes to amend Section 4)b) of the Fee
Schedule to provide that API Testing and Certification Fees for Third
Party Vendors, Service Bureaus and other non-Members will be assessed
(i) initially per API for FIX, FXD, CTD and MEI in the month the Non-
Member has been credentialed to use one or more ports in the production
environment for the tested API, and (ii) each time a Third Party
Vendor, Service Bureau, or other non-Member initiates a change to its
system that requires testing and certification. The Exchange also
proposes that such fees will not be assessed in situations where the
Exchange initiates a mandatory change to its System requiring testing
and certification by Non-Members of the Exchange.
The Exchange additionally proposes to amend Section 4)(c) of the
Fee Schedule to provide that Member Network Connectivity Testing and
Certification Fees will be assessed (i) initially per connection in the
month the Individual Firm has been credentialed to use any API or
Market Data feeds in the production environment utilizing the tested
network connection, and (ii) each time an Individual Firm initiates a
change to its system that requires network connectivity testing and
certification. The Exchange also proposes that such fees will not be
assessed in situations where the Exchange initiates a mandatory change
to its System requiring testing and certification by Members of the
Exchange.
The Exchange proposes to amend Section 4)d) of the Fee Schedule to
provide that Non-Member Network Connectivity Testing and Certification
Fees will be assessed (i) initially per connection in the month the
Service Bureau, Extranet Provider or other Non-Member has been
credentialed to use any API or Market Data feeds in the production
environment using the tested network connection, and (ii) each time a
Service Bureau, Extranet Provider or other non-Member initiates a
change to its system that requires network connectivity testing and
certification. The Exchange also proposes that such fees will not be
assessed in situations where the Exchange initiates a mandatory change
to its System requiring testing and certification by Members of the
Exchange.
The Exchange proposes to amend Section 5)a) of the Fee Schedule to
provide that Monthly Member Network Connectivity Fees for the
applicable connectivity will be assessed in any month the Member is
credentialed to use any of the MIAX APIs or Market Data feeds in the
production environment and will be pro-rated when a Member makes a
change to the connectivity (by adding or deleting connections) with
such pro-rated fees based on the number of trading days that the Member
has been credentialed to use any of the MIAX APIs or Market Data feeds
in the production environment through such connection, divided by the
total number of trading days in such month multiplied by the applicable
monthly rate.
The Exchange proposes to amend Section 5)b) of the Fee Schedule to
provide that Monthly Non-Member Network Connectivity Fees for the
applicable connectivity will be assessed in each month the Non-Member
has been credentialed to use any of the MIAX APIs or Market Data feeds
in the production environment and will be pro-rated when a Non-Member
makes a change to the connectivity (by adding or deleting connections)
with such pro-rated fees based on the number of trading days that the
Non-Member has been credentialed to use any of the MIAX APIs or Market
Data feeds via the network connection in the production environment
through such connection, divided by the total number of trading days in
such month multiplied by the applicable monthly rate.
The Exchange proposes to amend Section 5)d)i) of the Fee Schedule
to provide that MIAX will assess monthly FIX Port Fees on Members in
each month the Member is credentialed to use a FIX Port in the
production environment and based upon the number of credentialed FIX
Ports.
The Exchange further proposes to amend Section 5)d)ii) of the Fee
Schedule to provide that MIAX will assess monthly MEI Port Fees on
Market Makers in each month the Member has been credentialed to use the
MEI Port in the production environment and has been assigned to quote
in at least one class. The amount of the monthly MEI Port Fee will be
based upon the number of classes in which the Market Maker was assigned
to quote in any given day within the calendar month, and upon the class
volume percentages set forth in the MEI Port Fee table in Section
5)d)ii). The class volume percentage is based on the total national
average daily volume in classes listed on MIAX in the prior calendar
quarter.
The Exchange also proposes to amend Section 5)d)iii) of the Fee
Schedule to provide that CTD Port Fees will be assessed in any month
the Member is credentialed to use the CTD Port in the production
environment.
The Exchange also proposes to amend Section 5)d)iv) of the Fee
Schedule to provide that FXD Port Fees will be assessed in any month
the Member is credentialed to use the FXD Port in the production
environment.
The Exchange proposes to amend Section 5)e) of the Fee Schedule to
provide that MIAX Member Participant Identifier (``MPID'') Fees will be
assessed in each month the Member is credentialed to use such MPIDs in
the production environment.
The Exchange additionally proposes to amend Section 6 of the Fee
Schedule to provide that, with respect to each of the Exchange's data
feeds including MIAX Top of Market (``ToM''), Administrative
Information Subscriber (``AIS'') and MIAX Order Feed (``MOR''), MIAX
will assess Market Data Fees applicable to such data feed on Internal
and External Distributors in each month the Distributor is credentialed
to use such data feed in the production environment.
The purpose of the proposed rule change is to provide all users of
the Exchange with greater transparency as to when non-transactional
fees will be assessed to such users. The Exchange believes that
defining the timing in the Fee Schedule will benefit all market
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participants by assisting them in the decision-making process for the
timing of their readiness to use the Exchange's System. Moreover,
establishing in the fee schedule the timing of certain non-transaction
fees enhances transparency on the Exchange and lets all market
participants know that they will not be assessed such fees until such
time as they are credentialed to use and avail themselves of the
Exchange's System.
The Exchange is also proposing minor technical amendments to the
Fee Schedule throughout the Fee Schedule (e.g., replacing the term
``MM'' with the term ``Market Maker'' and capitalizing the word
``Member'') to make consistent defined terms used throughout the Fee
Schedule. These changes are intended for clarity and ease of reference.
The proposed rule change will become effective July 1, 2016.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with Section 6(b) of the Act \12\ in general, and furthers the
objectives of Sections 6(b)(4) of the Act,\13\ in that it is an
equitable allocation of reasonable fees and other charges among
Exchange Members and other persons using its facilities, and Section
6(b)(5) of the Act,\14\ in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanisms of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
\14\ 15 U.S.C. 78f(b)(5).
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The proposed rule change furthers the objectives of Section 6(b)(4)
of the Act \15\ because it will apply equally to all MIAX participants
within the various categories set forth in the proposed rule change.
The Exchange further believes that it is equitable and reasonable to
amend the Fee Schedule to charge participants for these non-transaction
fees only when they are credentialed to use the facilities of the
Exchange, and not before that time.
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\15\ 15 U.S.C. 78f(b)(4).
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The proposed rule change is consistent with Section 6(b)(5) of the
Act,\16\ in that it is designed to protect investors and the public
interest and to promote just and equitable principles of trade by
adding transparency to the Exchange's marketplace and by broadening the
description of non-transactional fees to include the timing of
assessment of such fees, and by ensuring that these fees will only be
assessed on MIAX participants when they are credentialed to use the
facilities of the Exchange.
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\16\ 15 U.S.C. 78f(b)(5).
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed changes would increase both intermarket and intramarket
competition by defining the timing of non-transactional fee assessments
for all users of the Exchange, thereby creating greater clarity around
the Exchange's assessment of such fees for participants that wish to
begin and continue using the Exchange's facilities, and enabling them
to assess the competitive nature of the fees. 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 proposal will enhance
competition, because market participants will have more clarity
surrounding when they will be assessed non-transactional fees and will
also understand that they will not be assessed such fees until such
time as they are ready to use 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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, it has become effective
pursuant to 19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) \18\
thereunder.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative by July 1, 2016. The Commission believes that
waiving the 30-day operative delay is consistent with the protection of
investors and the public interest because it will allow the Exchange to
clarify the circumstances that trigger the assessment of fees to, and
billing of Member and Non-Member users of the Exchange's System so as
to assess existing non-transactional fees only on Member and Non-Member
users that are credentialed to use the System. The Commission notes
that the Exchange is not proposing any new fees, but is clarifying that
the Exchange will only assess certain non-transaction fees when the
Member or non-Member user is credentialed to use the Exchange's system.
Thus, the proposed rule change which will ensure that users will not be
billed until they are ready to begin using the Exchange system.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposed rule change as operative upon filing.\21\
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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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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-2016-18 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-2016-18. 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-2016-18, and should be
submitted on or before July 28, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-16122 Filed 7-6-16; 8:45 am]
BILLING CODE 8011-01-P