79244 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 2020 / Notices 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f). 13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

4A ‘‘Retail Order’’ means an agency or riskless 

principal order that meets the criteria of FINRA 

Rule 5320.03 that originates from a natural person 

and is submitted to the Exchange by a Retail 

Member Organization, provided that no change is 

made to the terms of the order with respect to price 

or side of market and the order does not originate 

from a trading algorithm or any other computerized 

methodology. See Exchange Rule 11.21(a). 

amendments would not otherwise affect 

the terms of the contracts. ICE Clear 

Europe does not believe the 

amendments would adversely affect 

competition among Clearing Members, 

materially affect the cost of clearing, 

adversely affect access to clearing in the 

new contracts for Clearing Members or 

their customers, or otherwise adversely 

affect competition in clearing services. 

Accordingly, ICE Clear Europe does not 

believe that the amendments would 

impose any impact or burden on 

competition that is not appropriate in 

furtherance of the purpose of the Act. 

(C) Clearing Agency’s Statement on 

Comments on the Proposed Rule 

Change Received From Members, 

Participants or Others 

Written comments relating to the 

proposed amendments have not been 

solicited or received by ICE Clear 

Europe. ICE Clear Europe will notify the 

Commission of any comments received 

with respect to the proposed rule 

change. 

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) 

of the Act 11 and paragraph (f) of Rule 

19b–4 12 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

ICEEU–2020–015 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–ICEEU–2020–015. 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 website (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 website 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 

filings will also be available for 

inspection and copying at the principal 

office of ICE Clear Europe and on ICE 

Clear Europe’s website at https://

www.theice.com/notices/ 

Notices.shtml?regulatoryFilings. 

All comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number SR–ICEEU–2020–015 

and should be submitted on or before 

December 30, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26988 Filed 12–8–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90555; File No. SR–MEMX– 

2020–14] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule 

December 3, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

30, 2020, MEMX LLC (‘‘MEMX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing with the 

Commission a proposed rule change to 

amend the fee schedule applicable to 

Members 3 pursuant to Exchange Rules 

15.1(a) and (c) in order to (i) provide 

pricing for Retail Orders 4 that add 

displayed liquidity and are executed on 

the Exchange; and (ii) provide pricing 

for transactions in securities priced 

below $1.00 per share that are executed 

on the Exchange. The text of the 

proposed rule change is provided in 

Exhibit 5. 

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 modify its 

fee schedule to adopt the fees and 

rebates described herein applicable to 

Retail Orders that add displayed 

liquidity to the Exchange (‘‘Added 


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5Market share percentage calculated as of 

November 24, 2020. The Exchange receives and 

processes data made available through consolidated 

data feeds (i.e., CTS and UTDF). 

6 Id. 

7A ‘‘Retail Member Organization’’ or ‘‘RMO’’ is 

a Member (or a division thereof) that has been 

approved by the Exchange under Exchange Rule 

11.21 to submit Retail Orders. See Exchange Rule 

11.21(a). 

8See Securities Exchange Act Release No. 90278 

(October 28, 2020), 85 FR 69667 (November 3, 2020) 

(SR–MEMX–2020–13). Retail Orders are only 

designated as such to the Exchange and are not 

identified as such on the Exchange’s market data 

feeds or otherwise identifiable as such to other 

market participants. See id. 

9This proposed pricing is referred to by the 

Exchange as ‘‘Added displayed volume, Retail 

Order’’ on the fee schedule. The Exchange is also 

proposing to adopt new fee code ‘‘r’’ to be 

appended as the second character after the 

applicable first fee code character for executions of 

all Retail Orders. The Exchange notes that, as 

indicated on the current fee schedule, the Exchange 

also appends as an additional character at the end 

of its fee codes either ‘‘A’’ or ‘‘B’’ to indicate 

whether an execution occurred: (A) In a security 

priced at or above $1.00 per share or (B) in a SubDollar Security. Accordingly, under the proposal, 

an execution of an Added Displayed Retail Volume 

transaction in a security priced at or above $1.00 

per share would be assigned a fee code of ‘‘BrA’’, 

‘‘DrA’’ or ‘‘JrA’’, as applicable, by the Exchange. 

Similarly, under the proposal, an execution of an 

Added Displayed Retail Volume transaction in a 

Sub-Dollar Security would be assigned a fee code 

of ‘‘BrB’’, ‘‘DrB’’ or ‘‘JrB’’, as applicable, by the 

Exchange. 

10This pricing is referred to by the Exchange on 

the fee schedule under the existing description 

‘‘Removed volume from MEMX Book’’ with a fee 

code of ‘‘RB’’ or ‘‘RrB’’, as applicable, assigned by 

the Exchange. 

11This pricing is referred to by the Exchange on 

the fee schedule under the existing description 

‘‘Added displayed volume’’, the existing 

description ‘‘Added non-displayed volume’’ or the 

proposed new description ‘‘Added displayed 

volume, Retail Order’’, as applicable, with a fee 

code of ‘‘BB’’, ‘‘BrB’’, ‘‘DB’’, ‘‘DrB’’, ‘‘JB’’, ‘‘JrB’’, 

‘‘HB’’, ‘‘HrB’’, ‘‘MB’’ or ‘‘MrB’’, as applicable, 

assigned by the Exchange. 

12 15 U.S.C. 78f. 

13 15 U.S.C. 78f(b)(4) and (5). 

Displayed Retail Volume’’) and 

transactions in securities priced below 

$1.00 per share (‘‘Sub-Dollar 

Securities’’) that are executed on the 

Exchange, effective as of December 1, 

2020. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues, 

to which market participants may direct 

their order flow. Based on publicly 

available information, no single 

registered equities exchange currently 

has more than approximately 16% of 

the total market share of executed 

volume of equities trading.5 Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow, 

and the Exchange currently represents 

less than 1% of the overall market 

share.6

Rebate for Added Displayed Retail 

Volume 

The Exchange recently adopted rules 

enabling Members to apply for status as 

Retail Member Organizations,7 and once 

approved as such by the Exchange, to 

designate qualifying orders as Retail 

Orders to the Exchange.8 Currently, 

there are no pricing incentives for Retail 

Orders, and Retail Orders are subject to 

the same standard fees and rebates 

applicable as if such orders were not 

designated as Retail Orders. 

The Exchange proposes to modify its 

fee schedule to adopt pricing for 

executions of Added Displayed Retail 

Volume and to adopt a fee code 

applicable to executions of all Retail 

Orders. Specifically, the Exchange 

proposes to adopt a rebate of $0.0034 

per share for executions of Added 

Displayed Retail Volume transactions in 

securities traded on the Exchange priced 

at or above $1.00 per share (the ‘‘ADRV 

Rebate’’).9 The Exchange notes that the 

proposed ADRV Rebate would not 

apply, and that the proposed standard 

pricing with respect to transactions in 

Sub-Dollar Securities, as further 

described below, would apply, to 

executions of Added Displayed Retail 

Volume transactions in Sub-Dollar 

Securities. The Exchange also notes that 

the proposed ADVR Rebate would not 

apply to executions of Retail Orders in 

securities priced at or above $1.00 per 

share that add non-displayed liquidity 

to the Exchange or remove liquidity 

from the Exchange, and instead, the fees 

and rebates otherwise applicable to such 

transactions under the current fee 

schedule would continue to apply. 

Thus, under the proposal, an execution 

of a Retail Order in a security priced at 

or above $1.00 per share that adds nondisplayed liquidity to the Exchange 

would receive a rebate of $0.0020 per 

share, which is the standard rebate for 

adding non-displayed liquidity to the 

Exchange, and an execution of a Retail 

Order in a security priced at or above 

$1.00 per share that removes liquidity 

from the Exchange would be charged a 

fee of $0.0025 per share, which is the 

standard fee for removing liquidity from 

the Exchange. 

Pricing for Transactions in Sub-Dollar 

Securities 

The Exchange currently does not 

charge any fees or provide any rebates 

for transactions in Sub-Dollar Securities 

that are executed on the Exchange. The 

Exchange now proposes to charge a 

standard fee of 0.30% of the total dollar 

value of any transaction (including a 

Retail Order) in Sub-Dollar Securities 

that removes liquidity from the 

Exchange (‘‘Removed Sub-Dollar 

Volume’’).10 The Exchange also 

proposes to provide a standard rebate of 

0.30% of the total dollar value of any 

transaction (including a Retail Order) in 

Sub-Dollar Securities that adds 

liquidity, displayed or non-displayed, to 

the Exchange (‘‘Added Sub-Dollar 

Volume’’).11 The proposed pricing for 

Removed Sub-Dollar Volume and 

Added Sub-Dollar Volume would only 

apply to transactions that are executed 

on the Exchange, and as such there 

would continue to be no fee charged or 

rebate provided for transactions in SubDollar Securities that are routed to and 

executed at another market center. 

The proposed rebate for executions of 

Added Sub-Dollar Volume is intended 

to increase order flow in Sub-Dollar 

Securities to the Exchange by 

incentivizing Members to increase the 

liquidity-providing orders in Sub-Dollar 

Securities they submit to the Exchange, 

which would support price discovery 

on the Exchange and provide additional 

liquidity for incoming orders. The 

proposed fee for executions of Removed 

Sub-Dollar Volume is intended to be a 

direct offset of the rebate provided for 

Added Sub-Dollar Volume so that the 

Exchange may remain revenue neutral 

with respect to such transactions while 

attempting to compete with other 

venues to attract this order flow. 

The proposed rule change does not 

include different fees or rebates for 

Retail Orders or transactions in SubDollar Securities that depend on the 

amount of orders submitted to, and/or 

transactions executed on or through, the 

Exchange. Accordingly, all fees and 

rebates described above are applicable 

to all Members, regardless of the overall 

volume of a Member’s trading activities 

on the Exchange. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6(b) of the 

Act,12 in general, and furthers the 

objectives of Sections 6(b)(4) and (5) of 

the Act,13 in particular, in that it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

other persons using its facilities and is 


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14Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

15See, e.g., SEC Staff Report on Algorithmic 

Trading in U.S. Capital Markets (August 5, 2020), 

available at https://www.sec.gov/files/Algo_

Trading_Report_2020.pdf. 

16See infra note 17. 

17See, e.g., The Nasdaq Stock Market LLC 

equities trading fee schedule on its public website 

(available at http://www.nasdaqtrader.com/ 

trader.aspx?id=pricelisttrading2), which reflects 

rebates to add displayed designated retail liquidity 

ranging from $0.00325–$0.0033 per share 

depending on the percentage add to total volume 

ratio, and a standard fee that generally applies to 

retail orders that remove liquidity of $0.0030 per 

share; the NYSE Arca, Inc. (‘‘NYSE Arca’’) equities 

trading fee schedule on its public website (available 

at https://www.nyse.com/publicdocs/nyse/markets/ 

nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), 

which reflects rebates for retail orders that provide 

displayed liquidity ranging from $0.0033–$0.0038 

per share depending on the applicable tier; the Cboe 

EDGX Exchange, Inc. (‘‘Cboe EDGX’’) equities 

trading fee schedule on its public website (available 

at https://markets.cboe.com/us/equities/ 

membership/fee_schedule/edgx/), which reflects 

rebates for retail orders that add liquidity ranging 

from $0.0032–$0.0037 per share depending on the 

applicable tier, and a standard fee that generally 

applies to retail orders that remove liquidity of 

$0.0027 per share. 

18 Id. 

19 15 U.S.C. 78f(b)(5). 

not designed to unfairly discriminate 

between customers, issuers, brokers, or 

dealers. 

As discussed above, the Exchange 

operates in a highly fragmented and 

competitive market in which market 

participants can readily direct order 

flow to competing venues if they deem 

fee levels at a particular venue to be 

excessive or incentives to be 

insufficient, and the Exchange 

represents only a small percentage of 

the overall market. The Commission and 

the courts have repeatedly expressed 

their preference for competition over 

regulatory intervention in determining 

prices, products, and services in the 

securities markets. In Regulation NMS, 

the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and also recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 14

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 

reduce use of certain categories of 

products, in response to new or 

different pricing structures being 

introduced into the market. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees and rebates, including with respect 

to Added Displayed Retail Volume and 

transactions in Sub-Dollar Securities, 

and market participants can readily 

trade on competing venues if they deem 

pricing levels at those other venues to 

be more favorable. The Exchange 

believes the proposed rule change 

reflects a reasonable and competitive 

pricing structure designed to incentivize 

market participants to direct order flow 

to the Exchange, which the Exchange 

believes would enhance market quality 

to the benefit of all Members and 

investors. The Exchange notes that the 

proposal does not include different fees 

or rebates for Retail Orders or 

transactions in Sub-Dollar Securities 

depending on the amount of orders 

submitted to, and/or transactions 

executed on or through, the Exchange. 

Accordingly, the proposed pricing 

structure is applicable to all Members, 

regardless of the overall volume of a 

Member’s trading activities on the 

Exchange. 

Rebate for Added Displayed Retail 

Volume 

The Exchange believes that the 

proposed ADRV Rebate is reasonable, 

equitable, and consistent with the Act 

because it would incentivize Members 

to submit additional displayed Retail 

Orders to the Exchange, which would 

enhance liquidity in Retail Orders on 

the Exchange and promote price 

discovery. The Exchange believes that 

this increased displayed liquidity would 

potentially stimulate further price 

competition for Retail Orders, thereby 

deepening the Exchange’s liquidity 

pool, enhancing market quality to the 

benefit of all Members and investors by 

providing more trading opportunities, 

supporting price discovery, and 

subjecting such transactions to the 

Exchange’s transparency, regulation, 

and oversight as a registered national 

securities exchange. 

The Exchange notes that a significant 

percentage of the orders of individual 

(i.e., retail) investors are executed overthe-counter.15 In addition, other 

exchanges maintain special pricing to 

encourage entry of retail orders to their 

markets, in part, to compete against the 

over-the-counter market.16 Without 

such pricing, the Exchange is not 

currently competitive with such other 

exchanges. The Exchange believes that 

it is thus appropriate to create a 

financial incentive to bring more Retail 

Order flow to the Exchange. The 

Exchange believes that investor 

protection and transparency is 

promoted by rewarding displayed 

liquidity on exchanges, including the 

Exchange. By offering a proposed ADRV 

Rebate of $0.0034, which is higher than 

the Exchange’s standard rebate of 

$0.0029 for executions of added 

displayed volume, the Exchange 

believes it will encourage use of Retail 

Orders, while maintaining consistency 

with the Exchange’s overall pricing 

philosophy of encouraging displayed 

liquidity. The Exchange places a higher 

value on displayed liquidity because the 

Exchange believes that displayed 

liquidity is a public good that benefits 

investors generally by providing greater 

price transparency and enhancing 

public price discovery, which 

ultimately lead to substantial reductions 

in transaction costs. 

Furthermore, the Exchange believes 

that the proposed ADRV Rebate of 

$0.0034 per share is reasonable and 

equitable because it is comparable to, 

and competitive with, the rebates 

provided by other exchanges for added 

displayed retail liquidity in securities 

priced at or above $1.00 per share.17 The 

Exchange also believes that providing a 

rebate to the liquidity adder, and 

charging a fee to the liquidity remover, 

with respect to the execution of a 

displayed Retail Order is reasonable, 

equitable and not unfairly 

discriminatory because it is designed, 

and the Exchange believes it is an 

appropriate effort, to incentivize 

displayable liquidity provision on the 

Exchange, thereby contributing to price 

discovery and price formation, 

consistent with the overall goal of 

enhancing market quality. Moreover, the 

Exchange notes that several other 

exchanges provide rebates to the 

liquidity adder, and charge fees to the 

liquidity remover, with respect to 

executions of retail orders, and that this 

aspect of the proposed ADRV Rebate 

does not raise any new or novel issues 

that have not previously been 

considered by the Commission in 

connection with the fees and rebates of 

other exchanges.18

The Exchange understands that 

Section 6(b)(5) of the Act 19 prohibits an 

exchange from establishing rules that 

are designed to permit unfair 

discrimination between market 

participants. However, Section 6(b)(5) of 

the Act does not prohibit exchange 

members or other broker-dealers from 

discriminating, so long as their activities 

are otherwise consistent with the federal 

securities laws. While the Exchange 

believes that markets and price 

discovery optimally function through 

the interactions of diverse flow types, it 

also believes that growth in 

internalization has required 

differentiation of Retail Order flow from 


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20See, e.g., the Cboe EDGX equities trading fee 

schedule on its public website (available at https:// 

markets.cboe.com/us/equities/membership/fee_

schedule/edgx/), which reflects a rebate of $0.00009 

per share for liquidity-adding transactions in 

securities priced below $1.00 per share; the NYSE 

Arca equities trading fee schedule on its public 

website (available at https://www.nyse.com/ 

publicdocs/nyse/markets/nyse-arca/NYSE_Arca_

Marketplace_Fees.pdf), which reflects a rebate of 

$0.00004 per share for liquidity-adding transactions 

in securities priced below $1.00 per share. 

21See, e.g., the Cboe EDGX equities trading fee 

schedule on its public website (available at https:// 

markets.cboe.com/us/equities/membership/fee_

schedule/edgx/), which reflects a fee of 0.30% of 

the total dollar value of the transaction for liquidityremoving transactions in securities priced below 

$1.00 per share; the Cboe BZX Exchange, Inc. 

equities trading fee schedule on its public website 

(available at https://markets.cboe.com/us/equities/ 

membership/fee_schedule/bzx/), which reflects a 

fee of 0.30% of the total dollar value of the 

transaction for liquidity-removing transactions in 

securities priced below $1.00 per share; the NYSE 

Arca equities trading fee schedule on its public 

website (available at https://www.nyse.com/ 

publicdocs/nyse/markets/nyse-arca/NYSE_Arca_

Marketplace_Fees.pdf), which reflects a fee of 

0.295% of the total dollar value for liquidity-taking 

transactions in securities priced below $1.00 per 

share. 22See supra note 14. 

other order flow types. The 

differentiation proposed herein by the 

Exchange is not designed to permit 

unfair discrimination, but instead to 

promote a competitive process around 

Retail Order executions such that retail 

investors would receive better rebates 

on the Exchange than they do currently 

in order to encourage entry of retail 

orders to the Exchange. Accordingly, the 

Exchange believes the proposed ADRV 

Rebate is not unfairly discriminatory. 

Pricing for Transactions in Sub-Dollar 

Securities 

The Exchange believes that the 

proposed changes with respect to 

pricing for executions of transactions in 

Sub-Dollar Securities would incentivize 

submission of additional liquidity in 

Sub-Dollar Securities to the Exchange 

through the proposed rebate of 0.30% of 

the total dollar value of any Added SubDollar Volume transactions, thereby 

promoting price discovery and 

transparency, and enhancing order 

execution opportunities for all 

Members. The Exchange believes that 

the proposed rebate for Added SubDollar Volume is reasonable because it 

would incentivize Members to direct 

more order flow in Sub-Dollar Securities 

to the Exchange. The Exchange notes 

that other exchanges provide rebates for 

liquidity-adding transactions in SubDollar Securities, but that these are 

denominated in dollar amounts per 

share rather than a percentage of the 

total dollar amount of the transaction.20

The Exchange expects that the proposed 

rebate for Added Sub-Dollar Volume 

transactions would typically result in a 

higher overall credit for a given 

transaction than the rebates offered by 

other exchanges, although the Exchange 

notes that it may also result in a lower 

overall credit for such transaction 

depending on the number of shares 

traded and the total dollar value of the 

transaction. 

The Exchange also believes that the 

proposed fee for Removed Sub-Dollar 

Volume is reasonable because it is in 

line with the fees charged by other 

exchanges for liquidity-removing 

transactions in Sub-Dollar Securities.21

The Exchange believes that, given the 

competitive environment in which the 

Exchange currently operates, the 

proposed pricing structure, with an 

offsetting fee and rebate, with respect to 

executions of transactions in Sub-Dollar 

Securities, is a reasonable attempt to 

increase liquidity in Sub-Dollar 

Securities on the Exchange and improve 

the Exchange’s market share relative to 

its competitors while remaining revenue 

neutral with respect to such 

transactions. 

The Exchange also believes that the 

proposed fee and rebate structure 

applicable to executions of transactions 

in Sub-Dollar Securities is equitably 

allocated and not unfairly 

discriminatory because it applies 

equally to all Members and is 

reasonably related to the value of the 

Exchange’s market quality associated 

with higher volume. A number of 

Members currently transact in SubDollar Securities and they, along with 

additional Members that choose to 

direct order flow in Sub-Dollar 

Securities to the Exchange, would all 

qualify for the proposed fee and rebate. 

The Exchange believes that maintaining 

or increasing the proportion of 

transactions in Sub-Dollar Securities 

that are executed on the Exchange 

would benefit all investors by 

deepening the Exchange’s liquidity 

pool, which would support price 

discovery, promote market transparency 

and improve investor protection, further 

rendering the proposed changes 

reasonable and equitable. 

In conclusion, the Exchange also 

submits that its proposed fee structure 

satisfies the requirements of Sections 

6(b)(4) and 6(b)(5) of the Act for the 

reasons discussed above in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among its Members and other persons 

using its facilities and is not designed to 

unfairly discriminate between 

customers, issuers, brokers, or dealers. 

As described more fully below in the 

Exchange’s statement regarding the 

burden on competition, the Exchange 

believes that its transaction pricing, 

including with respect to Retail Orders 

and transactions in Sub-Dollar 

Securities, is subject to significant 

competitive forces, and that the 

proposed fees and rebates described 

herein are appropriate to address such 

forces. 

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. Instead, as 

discussed above, the Exchange believes 

that the proposed change would 

encourage the submission of additional 

order flow, including Retail Orders and 

orders in Sub-Dollar Securities, to the 

Exchange, thereby promoting market 

depth, enhanced execution 

opportunities, as well as price discovery 

and transparency for all Members. 

Furthermore, the Exchange believes that 

the proposed changes would allow the 

Exchange to compete more ably with 

other execution venues by providing 

more competitive pricing for Added 

Displayed Retail Volume and 

transactions in Sub-Dollar Securities, 

thereby making it a more desirable 

destination venue for its customers. As 

a result, the Exchange believes that the 

proposed change furthers the 

Commission’s goal in adopting 

Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 22

Intramarket Competition 

The Exchange believes that the 

proposed changes would incentivize 

market participants to direct more order 

flow to the Exchange. Greater liquidity 

benefits all Members by providing more 

trading opportunities and encourages 

Members to send orders to the 

Exchange, thereby contributing to robust 

levels of liquidity, which benefits all 

Members. The proposed fees and rebates 

for Added Displayed Retail Volume and 

transactions in Sub-Dollar Securities 

would be available to all similarlysituated market participants, and, as 

such, the proposed change would not 

impose a disparate burden on 

competition among market participants 

on the Exchange. As such, the Exchange 

believes the proposed changes would 

not impose any burden on intramarket 

competition that is not necessary or 


jbell on DSKJLSW7X2PROD with NOTICES
79248 Federal Register / Vol. 85, No. 237 / Wednesday, December 9, 2020 / Notices 

23See supra note 14. 

24NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSE–2006–21)). 

25 15 U.S.C. 78s(b)(3)(A)(ii). 

26 17 CFR 240.19b–4(f)(2). 27 17 CFR 200.30–3(a)(12). 

appropriate in furtherance of the 

purposes of the Act. 

Intermarket Competition 

The Exchange operates in a highly 

competitive market. Members have 

numerous alternative venues that they 

may participate on and direct their 

order flow to, including 15 other 

equities exchanges and numerous 

alternative trading systems and other 

off-exchange venues. As noted above, no 

single registered equities exchange 

currently has more than approximately 

16% of the total market share of 

executed volume of equities trading, 

and the Exchange currently represents 

less than 1% of the overall market share. 

Thus, in such a low-concentrated and 

highly competitive market, no single 

equities exchange possesses significant 

pricing power in the execution of order 

flow. Moreover, the Exchange believes 

that the ever-shifting market share 

among the exchanges from month to 

month demonstrates that market 

participants can shift order flow or 

discontinue to reduce use of certain 

categories of products, in response to 

new or different pricing structures being 

introduced into the market. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees and rebates, including with respect 

to Added Displayed Retail Volume and 

transactions in Sub-Dollar Securities, 

and market participants can readily 

choose to send their orders to other 

exchange and off-exchange venues if 

they deem fee levels at those other 

venues to be more favorable. As 

described above, the proposed changes 

are competitive proposals through 

which the Exchange is seeking to 

encourage certain order flow to be sent 

to the Exchange. 

Additionally, the Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 23 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. SEC, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’.24 Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

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 25 and Rule 

19b–4(f)(2) 26 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. 

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 rule-comments@

sec.gov. Please include File Number SR– 

MEMX–2020–14 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–MEMX–2020–14. 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 website (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 website 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. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MEMX–2020–14, and 

should be submitted on or before 

December 30, 2020. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–26989 Filed 12–8–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–317, OMB Control No. 

3235–0360] 

Submission for OMB Review; 

Comment Request 

Upon Written Request Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 


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