[Federal Register Volume 81, Number 209 (Friday, October 28, 2016)]
[Notices]
[Pages 75171-75174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26054]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-79146; File No. SR-MIAX-2016-36]
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
October 24, 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 October 14, 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 (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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the Fee Schedule to reflect the
addition of
[[Page 75172]]
new features to a number of existing interfaces and data feeds, and one
new market data feed, as described below, to support the trading of
complex orders on the Exchange. The Exchange is not proposing to adopt
any new fees at this time and is simply proposing to state in the Fee
Schedule that the interfaces and data feeds listed below will support
the trading of complex orders on MIAX initially at no additional
charge.
Background
The Exchange recently adopted new rules governing the trading in,
and detailing the functionality of the MIAX System \3\ in the handling
of, complex orders on the Exchange.\4\ In order to support the trading
of complex orders on the Exchange, the Exchange is proposing to expand
several current interfaces and data feeds (for which a fee is presently
charged) to include complex orders in the current interfaces and data
feeds and in the proposed new data feed. The Exchange is not proposing
to adopt new fees, and instead is proposing to enhance the current
interfaces and data feeds, and to introduce a new data feed, cToM
(described below) to support the trading of complex orders on the
Exchange.
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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.
\4\ See Securities Exchange Act Release No. 79072 (October 7,
2016), 81 FR 71131 (October 14, 2016) (SR-MIAX-2016-26) (Order
Approving a Proposed Rule Change to Adopt New Rules to Govern the
Trading of Complex Orders).
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Interfaces
The Exchange is proposing to include complex orders in its current
interfaces to the System that enable Members to connect with the System
for various uses. Specifically, the Exchange is proposing to enhance
the MIAX Financial Information Exchange (``FIX'') Port, the MIAX
Express Interface (``MEI'') Port, the MIAX Clearing Trade Drop
(``CTD'') Port, and the MIAX FIX Trade Drop (``FXD'') Port (each
described below) to support the trading of complex orders on MIAX. The
Exchange is proposing to reflect this enhancement by adding new
language to the Fee Schedule describing the application of these
interfaces to complex orders.
FIX Port
The Financial Information Exchange (``FIX'') Port \5\ allows
Members to electronically send orders in all products traded on the
Exchange. Section 5(d)(i) of the Fee Schedule currently provides 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 is
proposing to amend Section 5(d)(i) of the Fee Schedule to state clearly
in footnote 25 that a FIX Port is an interface with MIAX systems that
enables the Port user (typically an Electronic Exchange Member
(``EEM'') \6\ or a Market Maker) to submit simple and complex orders
electronically to MIAX.
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\5\ A FIX Port is an interface with MIAX systems that enables
the Port user (typically an EEM or a Market Maker) to submit orders
electronically to MIAX.
\6\ 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 Act. See Exchange Rule 100.
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MEI Port
The MIAX Express Interface (``MEI'') \7\ Port, allows Market Makers
to submit electronic quotes to the Exchange. Section 5(d)(ii) of the
Fee Schedule provides 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 is based
upon the number of classes in which the Market Maker was assigned to
quote on any given day within the calendar month, and upon various
levels of class volume percentages. In addition to its current
features, the MEI Port will now include the identification of the
complex strategies currently trading on MIAX. The Exchange is proposing
to amend Section 5(d)(ii) of the Fee Schedule to state clearly in
footnotes 27, 28 and 29 that MIAX Express Interface is a connection to
MIAX systems that enables Market Makers to submit simple and complex
electronic quotes to MIAX; that Full Service MEI Ports provide Market
Makers with the ability to send Market Maker simple and complex quotes,
eQuotes, and quote purge messages to the MIAX System; and that Limited
Service MEI Ports provide Market Makers with the ability to send simple
and complex eQuotes and quote purge messages only, but not Market Maker
Quotes, to the MIAX System.
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\7\ MIAX Express Interface is a connection to MIAX systems that
enables Market Makers to submit electronic quotes to MIAX.
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CTD Port
The Clearing Trade Drop (``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, EEM, Broker-Dealer); and (v) Exchange
Member Participant Identifier (``MPID'') for each side of the
transaction, including Clearing Member MPID. CTD Port Fees are assessed
in any month the Member is credentialed to use the CTD Port in the
production environment. The Exchange is proposing to state clearly in
Section 5(d)(iii) of the Fee Schedule that the CTD Port users will
receive strategy specific information for complex transactions.
FXD Port
The FIX Drop Copy Port (``FXD'') is a messaging interface that
provides a copy of real-time trade execution, trade correction and
trade cancellation information to FIX Drop Copy Port users who
subscribe to the service. FIX Drop Copy Port users are those users who
are designated by an EEM to receive the information and the information
is restricted for use by the EEM only. FXD Port Fees are assessed in
any month the Member is credentialed to use the FXD Port in the
production environment. The Exchange is proposing to state clearly in
Section 5(d)(iv) of the Fee Schedule that the FXD is a messaging
interface that will provide a copy of real-time trade execution, trade
correction and trade cancellation information for simple and complex
orders to FIX Drop Copy Port users who subscribe to the service. FXD
Port users will receive a copy of real-time trade execution, trade
correction and cancellation information for transactions in simple and
complex orders on MIAX.
Market Data Feeds
The Exchange is also proposing to expand the scope of certain
market data products to include data relating to complex orders traded
on the Exchange at no additional cost to subscribers. Specifically, the
Exchange is proposing to expand the MIAX Top of Market (``ToM'') feed,
the MIAX Order Feed (``MOR''), and the Administrative Information
Subscriber (``AIS'') data feeds, as described below, to include data
for complex orders traded on MIAX.
MIAX ToM and cToM
MIAX Top of Market (``ToM'') is a market data product that provides
a
[[Page 75173]]
direct data feed that includes the Exchange's best bid and offer, with
aggregate size, based on displayable order and quoting interest on the
Exchange. The ToM data feed includes data that is identical to the data
sent to the processor for the Options Price Reporting Authority
(``OPRA'').
The Exchange is proposing to provide complex order market data in a
similar fashion by way of a new market data product known as MIAX
Complex Top of Market (``cToM''). The cToM data feed is a separate new
product that is complex order specific and is available to those who
wish to subscribe to it. cToM will provide subscribers with the same
information as the ToM market data product as it relates to the
Strategy Book, i.e., the Exchange's best bid and offer for a complex
strategy, known as the ``cMBBO,'' with aggregate size, based on
displayable order and quoting interest in the complex strategy on the
Exchange.\8\
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\8\ For a complete description of ToM, see Securities Exchange
Act Release No. 69007 (February 28, 2013), 78 FR 14617 (March 6,
2013) (SR-MIAX-2013-05).
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cToM will also contain a feature (``feature'') that provides the
number of Priority Customer \9\ contracts that are included in the size
associated with the Exchange's best bid and offer. This feature will be
implemented on a date determined by the Exchange and communicated to
membership via Regulatory Circular. The Exchange will announce the
implementation date of the feature no later than 90 days after the
publication of the Commission Order (``Order'') approving the trading
of complex orders on MIAX in the Federal Register.\10\ The
implementation date will be no later than 90 days following publication
of the Regulatory Circular announcing publication of the approval Order
in the Federal Register.
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\9\ 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 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Exchange Rule
100.
\10\ See supra note 4.
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In addition, cToM will provide subscribers with the identification
of the complex strategies currently trading on MIAX; complex strategy
last sale information; and the status of securities underlying the
complex strategy (e.g., halted, open, or resumed). As stated above,
cToM is distinct from ToM, and anyone wishing to receive cToM data must
subscribe to cToM regardless of whether they are a current ToM
subscriber. ToM subscribers are not required to subscribe to cToM, and
cToM subscribers are not required to subscribe to ToM. The cToM feed
will be available initially at no cost, as reflected in the proposed
changes to the table in Section 6(a) of the Fee Schedule.
AIS
The Exchange will include certain administrative information
concerning complex orders to Administrative Information Subscribers
(``AIS''). The AIS market data feed includes opening imbalance
condition information; opening routing information; Expanded Quote
Range information, as provided in MIAX Rule 503(f)(5); Post-Halt
Notification, as provided in MIAX Rule 504(d); and Liquidity Refresh
condition information, as provided in MIAX Rule 515(c)(2)
(collectively, the ``administrative information''). An AIS is a market
participant that connects with the MIAX System for purposes of
receiving the administrative information. Thus, an AIS that elects not
to receive the top of market data through a subscription to cToM or act
as a MIAX Market Maker will be able to receive the administrative
information via connectivity to the MIAX System through an AIS
Port.\11\ The Exchange proposes to enhance AIS to include information
concerning the commencement of a Complex Auction under the complex
order rules.\12\ The addition of complex order information to the AIS
data feed is a value-added feature of AIS, and the Exchange proposes to
state clearly in Section 6(b) of the Fee Schedule that the AIS market
data feed will include administrative information for simple and
complex orders. The fee for the AIS market data feed is currently
waived for distributors that also subscribe to ToM. The Exchange
proposes to amend Section 6(b) of the Fee Schedule to provide that the
AIS market data feed is also waived if the distributor subscribes to
cToM.
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\11\ An AIS Port provides an AIS with the connectivity necessary
to receive administrative information from the MIAX System. See
Securities Exchange Act Release No. 73326 (October 9, 2014), 79 FR
62233 (October 16, 2014) (SR-MIAX-2014-51).
\12\ See supra note 4.
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MOR
The Exchange proposes to include complex order information as an
enhanced feature of the MIAX Order Feed (``MOR'') data product. MOR is
a real-time full order book data feed that provides information for
orders on the MIAX Book. MOR will now also include the same information
regarding complex orders on the Strategy Book. MOR will provide real-
time information to enable users to keep track of the Strategy Book for
all complex strategies traded on MIAX. Specifically, MOR will now
include information concerning the identification of complex orders on
the Strategy Book (as described in the proposal to establish rules for
the trading of complex orders on the Exchange).\13\ MOR will provide
real-time data including the limit price, origin, and size of each
order for the entire Strategy Book to its users and the Exchange
proposes to state clearly in Section 6(c) of the Fee Schedule that the
AIS market data feed will include administrative information for simple
and complex orders.
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\13\ See supra note 4.
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2. Statutory Basis
MIAX believes that its proposed rule change is consistent with
Section 6(b) of the Act \14\ in general, and furthers the objectives of
Section 6(b)(4) \15\ of the Act, in that it is designed to provide for
an equitable allocation of reasonable dues, fees and other charges
among Exchange Members and other persons using its facilities, because
it applies equally to all Members and any persons using the facilities
or services of the Exchange.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(4).
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In addition, the Exchange believes the proposed rule change also
furthers the objectives of Section 6(b)(5) \16\ of the Act in
particular, 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, and it is not designed to permit unfair discrimination
among customers, brokers, or dealers.
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\16\ 15 U.S.C. 78f(b)(5).
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The proposed addition of complex order information to the various
enumerated ports and market data products are [sic] designed to promote
just and equitable principles of trade by providing MIAX participants
with trading information and market data that should enable them to
make informed decisions concerning complex orders on the MIAX Exchange
by using the data provided by MIAX to assess market conditions that
directly affect such decisions. The proposal to include the value-added
feature of complex order information to existing ports and data
products removes impediments to, and is designed to further perfect,
the mechanisms of a free and open market
[[Page 75174]]
and a national market system by making the MIAX market, more
transparent and accessible to market participants as MIAX begins to
trade complex orders.
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. On the contrary, the
Exchange believes that the addition of information concerning complex
orders to the various ports and market data products will enhance
inter-market competition by supplementing existing ports and data
products with information concerning complex orders traded on MIAX.
This transparency and access should enable MIAX to compete with other
exchanges for order flow in complex orders in the options markets.
Additionally, respecting intra-market competition, the value-added
features relating to complex orders in the various ports and data
products are available to all subscribers at no additional cost, thus
providing all subscribers to the ports and data products with an even
playing field with respect to information and access to trade complex
orders on MIAX.
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 from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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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) normally does
not become operative for 30 days from the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii),\19\ 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. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Such waiver will allow
the Exchange to offer the features relating to the trading of complex
orders that will be embedded in the Exchange's enumerated ports and
market data products on the date that coincides with the projected
October 24, 2016 launch of the trading of complex orders on the
Exchange.\20\ Accordingly, the Commission hereby waives the 30-day
operative delay requirement and designates the proposed rule change as
operative upon filing with the Commission.
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\19\ 17 CFR 240.19b-4(f)(6)(iii).
\20\ 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.
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-2016-36 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-2016-36. 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-2016-36, and should be
submitted on or before November 18, 2016.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-26054 Filed 10-27-16; 8:45 am]
BILLING CODE 8011-01-P