68762 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

15 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). 

4On August 8, 2022, the Commission approved 

SR–MEMX–2022–10, which proposed rules for the 

trading of options on the Exchange. See Securities 

Exchange Act Release No. 95445 (August 8, 2022), 

87 FR 49894 (August 12, 2022) (SR–MEMX–2022– 

010). The Exchange launched MEMX Options on 

September 27, 2023. 

5The Exchange initially filed the proposed 

changes on September 1, 2023 (SR–MEMX–2023– 

22). On September 13, 2023, the Exchange 

withdrew that filing and submitted SR–MEMX– 

2023–23. On September 28, 2023, the Exchange 

withdrew SR–MEMX–2023–23 and submitted this 

filing. 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NASDAQ–2023–038 and should be 

submitted on or before October 25, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21931 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98648; File No. SR–MEMX– 

2023–26] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule and Adopt Membership Fees 

for MEMX Options 

September 29, 2023. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on 

September 28, 2023, MEMX LLC 

(‘‘MEMX’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘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 Exchange’s fee schedule 

applicable to Members 3 (the ‘‘Fee 

Schedule’’) pursuant to Exchange Rules 

15.1(a) and (c) to establish membership 

fees for Members of the Exchange’s 

options platform and make a number of 

clarifying, organizational changes to its 

Fee Schedule. The Exchange proposes 

to implement the changes to the Fee 

Schedule pursuant to this proposal 

immediately. 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 

In connection with the Exchange’s 

launch of MEMX Options,4 its options 

trading platform, the Exchange proposes 

to modify its fee schedule applicable to 

use of the Exchange, effective 

immediately, in order to: (i) establish 

membership fees (‘‘Membership Fees’’) 

for MEMX Options Members, and (ii) 

make a number of clarifying, 

organizational changes to its single 

existing fee schedule, in order to create 

three separate fee schedules for: (A) 

executions that occur on the Exchange’s 

pre-existing equities market (‘‘MEMX 

Equities’’), (B) executions that occur on 

MEMX Options, and (C) the Exchange’s 

Membership Fees (for both MEMX 

Equities and MEMX Options), 

respectively.5 The Exchange believes 

that these changes will provide greater 

transparency to Members about how the 

Exchange assesses fees and calculates 

rebates, as well as allowing Members to 

more easily validate their bills on a 

monthly basis. The Exchange notes that 

none of these changes amend any 

existing fee or rebate for applicable to 

MEMX Equities (including nontransaction fees such as membership, 

connectivity, and market data). 

Specifically, the Exchange is proposing 

the following: 

• To more clearly separate pricing 

applicable to MEMX Options from the 

Exchange’s current fee schedule, which 

will remain applicable to MEMX 

Equities. Although the Exchange has 

always maintained a single fee schedule 

applicable to trades on the Exchange, as 

the Exchange has launched the MEMX 

Options platform, the Exchange believes 

that separating the fee schedules for 

MEMX Options and MEMX Equities 

will reduce potential confusion. The 

Exchange currently intends to begin 

charging for connectivity and market 

data for MEMX Options in 2024 and 

will file separately to adopt such fees. 

The Exchange has also intentionally left 

blank certain additional portions of the 

MEMX Options fee schedule, including 

‘‘Transaction Fees’’ and ‘‘Options 

Regulatory Fee’’, and it has filed 

separately to adopt those specific fees. 

• To more clearly separate 

Membership Fees from the Exchange’s 

current fee schedule. Membership Fees 

are applicable to Members of both 

MEMX Equities and MEMX Options 

platforms. Because the Membership 

Fees section is applicable to members of 

both platforms, the Exchange believes 

that separating the fee schedule for 

Membership Fees (such separate fee 

schedule for Membership Fees, the 

‘‘Membership Fee Schedule’’) will 

reduce potential confusion (e.g., as to 

which fees a Member that participates 

on both MEMX Equities and MEMX 

Options must pay on a monthly basis to 

maintain membership with the 

Exchange). 

• To implement additional fees set 

forth on the Membership Fee Schedule 

that would be applicable to Options 

Order Entry Firms (as defined in 

Exchange Rule 16.1) and Options 

Market Makers (i.e., those Options 

Members that have registered as Market 

Makers on the Exchange under 

Exchange Rule 22.2.). Options Order 

Entry Firms and Options Market Makers 

would collectively be referred to on the 

Membership Fee Schedule as ‘‘Options 

Trading Members.’’ As proposed, the 

Membership Fee Schedule will easily 

identify the fees for membership that are 

applicable to all Members of MEMX 

(including Members of MEMX Equities 

and MEMX Options) and the additional 

fees for membership which are 

applicable to all Options Trading 

Members. 

• To add a hyperlink within the 

‘‘Additional Fees’’ sections of the 

MEMX Equities Fee Schedule and the 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68763 

6See PHLX Fee Schedule Section 8A, 8B, and 8C, 

available at https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules/phlx-options-7 (last visited 

September 27, 2023). 

7See BOX Options Fee Schedule Section I, 

available at https://boxoptions.com/fee-schedule/ 

(last visited September 27, 2023). 

8See NYSE American Options Fees Schedule 

Section III(A), available at https://www.nyse.com/ 

publicdocs/nyse/markets/american-options/NYSE_

American_Options_Fee_Schedule.pdf (last visited 

September 27, 2023). 

9See NYSE Arca Options Fees and Charges, 

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

nyse/markets/arca-options/NYSE_Arca_Options_

Fee_Schedule.pdf (last visited September 27, 2023). 

10See MIAX Options Fee Schedule, Section 3, 

available at https://www.miaxglobal.com/markets/ 

us-options/miax-options/fees (last visited 

September 27, 2023). 

MEMX Options Fee Schedule, which 

will electronically hyperlink the reader 

to the Membership Fee Schedule on the 

Exchange’s website. 

(i) MEMX Options Membership Fees 

As the existing fee applicable to 

Membership is not specific to 

participation on a specific trading 

platform, the Exchange will continue to 

charge its current Membership Fee of 

$200 per month to each Exchange 

Member, other than those to whom a 

waiver applies as set forth below (i.e., 

the Exchange will charge a single fee of 

$200 to Members of MEMX Equities, 

Members of MEMX Options, and 

Members of both MEMX Equities and 

MEMX Options). In addition, the 

Exchange is proposing to charge an 

additional $1,000 per month to Options 

Order Entry Firms (as defined in 

Exchange Rule 16.1), and an additional 

$7,000 per month to Options Market 

Makers, (i.e., those Options Members 

that have registered as Market Makers 

on the Exchange under Exchange Rule 

22.2.). The Exchange notes that the 

proposed fees for Options Trading Firms 

are competitive with and in several 

cases significantly lower than the fees 

for membership imposed by several 

other options exchanges that charge 

such fees. The Exchange provides the 

below table for comparison purposes to 

show how the Exchange’s proposed fees 

for membership compare to fees for 

membership currently charged by other 

options exchanges. 

Exchange Monthly membership trading permit fee 

MEMX Options (as proposed) ............................. All Members: $200. 

Options Order Entry Firm: $1,000. 

Options Market Maker: $7,000. 

Nasdaq PHLX LLC (‘‘PHLX’’) 6 ........................... Streaming Quote Trader (‘‘SQT’’) permit fees: 

Tier 1 (up to 200 option classes): $0.00. 

Tier 2 (up to 400 option classes): $2,200. 

Tier 3 (up to 600 option classes): $3,200. 

Tier 4 (up to 800 option classes): $4,200. 

Tier 5 (up to 1,000 option classes): $5,200. 

Tier 6 (up to 1,200 option classes): $6,200. 

Tier 7 (all option classes): $7,200. 

Remote Market Maker Organization (‘‘RMO’’) permit fees: 

Tier 1 (less than 100 classes): $5,000. 

Tier 2 (more than 100 and less than 999 classes): $8,000. 

Tier 3 (1000 or more classes): $11,000. 

BOX Options Exchange LLC (‘‘BOX’’) 7 .............. Participant Fee: $1,500 per month (Electronic Market Makers are not charged the Participant 

Fee). 

Market Maker Trading Permit fees: 

Up to and including 10 classes: $4,000. 

Up to and including 40 classes: $6,000. 

Up to and including 100 classes: $8,000. 

Over 100 classes: $10,000. 

NYSE American, LLC (‘‘NYSE American’’) 8 ...... Permit (‘‘ATP’’) Fees: 

Floor Broker: $500. 

Order Flow Provider: $1,000. 

Clearing Member: $1,000. 

Options Market Maker 1st ATP: $8,000. 

Options Market Maker 2nd ATP: $6,000. 

Options Market Maker 3rd ATP: $5,000. 

Options Market Maker 4th ATP: $4,000. 

Options Market Maker 5th ATP: $3,000. 

Options Market Maker 6th to 9th ATP: $2,000. 

Options Market Maker 10th or more ATPs: $500. 

NYSE Arca, Inc. (‘‘NYSE Arca’’) 9 ....................... Permit (‘‘OTP’’) Fees: 

Office or Clearing Firms: $1,000. 

Floor Broker: $500. 

Options Market Maker 1st ATP: $8,000. 

Options Market Maker 2nd ATP: $6,000. 

Options Market Maker 3rd ATP: $5,000. 

Options Market Maker 4th ATP: $4,000. 

Options Market Maker 5th ATP: $3,000. 

Options Market Maker 6th to 9th ATP: $2,000. 

Options Market Maker 10th or more ATPs: $500. 

Reserve Market Maker OTP: $175. 

MIAX Options Exchange (‘‘MIAX Options’’) 10 .... Electronic Exchange Members Trading Permit: $1,500. 

Market Maker Trading Permit (up to 10 classes): $7,000. 

Market Maker Trading Permit (up to 40 classes): $12,000. 

Market Maker Trading Permit (up to 100 classes): $17,000. 

Market Maker Trading Permit (over 100 classes): $22,000. 


lotter on DSK11XQN23PROD with NOTICES1
68764 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

11See Securities Exchange Act Release No. 97893 

(July 13, 2023), 88 FR 46285 (July 19, 2023) (SR– 

MEMX–2023–13). 

12 15 U.S.C. 78f. 

13 15 U.S.C. 78f(b)(1). 

14See supra note 12. 

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

16See supra notes 6 through 10. 

17See supra note 7. 

18See id. 

19See supra note 9. 

20See MEMX U.S. Options FAQ, available at 

https://info.memxtrading.com/us-options-tradingresources/us-options-faq/ (last visited September 

27, 2023). 

The Exchange proposes to maintain 

its existing billing practices for all 

Membership Fees, including the newly 

proposed Options Membership Fees. As 

is current practice, Members will be 

assessed their monthly Membership 

Fees at the close of business on the first 

day of each month. The Exchange will 

also maintain the current practice such 

that if a Member is pending a voluntary 

termination of rights as a Member 

pursuant to Exchange Rule 2.8 prior to 

its monthly Membership Fee being 

assessed and the Member does not 

utilize the facilities of the Exchange 

while such voluntary termination of 

rights is pending, then the Member will 

not be obligated to pay the monthly 

Membership Fee. Additionally, the 

Membership Fees will not be prorated if 

a membership is not active for an entire 

month, which the Exchange believes is 

reasonable based on the frequency that 

the fee is assessed (i.e., monthly instead 

of applying to a longer period). 

Lastly, to encourage new participants 

to join MEMX Options, effective June 

30, 2023, the Exchange implemented a 

Membership Fee Waiver until January 1, 

2024.11 The Exchange is proposing to 

maintain this language on the new 

Membership Fee Schedule, and as such, 

will apply this waiver to the additional 

proposed Membership Fees for new 

Members of MEMX Options as well. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change to reorganize the 

fee schedule as described above is 

consistent with the provisions of 

Section 6 of the Act,12 in general, and 

furthers the objective of Section 6(b)(1) 

of the Act,13 in particular, in that the 

proposed rule change enables the 

Exchange to be so organized as to have 

the capacity to be able to carry out the 

purposes of the Act and to comply with 

the provisions of the Act, the rules and 

regulations thereunder, and the rules of 

the Exchange. The proposed 

reorganization of the Exchange’s fee 

schedule is designed to make the fee 

schedule easier to read and for Members 

to validate the bills they receive from 

the Exchange. The Exchange believes 

the proposed fee schedules, and the 

division thereof, will be clearer and less 

confusing for Members of the Exchange 

and will eliminate potential Member 

confusion. 

The Exchange believes that the 

proposed Membership Fee changes are 

consistent with the provisions of 

Section 6 of the Act,14 in general, and 

with Sections 6(b)(4) and 6(b)(5) of the 

Act,15 in particular, in that they provide 

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 permit 

unfair discrimination between 

customers, issuers, brokers, or dealers, 

as further discussed below. 

MEMX believes that its $200 

Membership Fee which is assessed to all 

Members (Members of MEMX Options 

and Members of MEMX Equities alike) 

is consistent with the Act, as the 

Exchange assesses the same fee to all 

Members of the Exchange on all 

platforms. The Exchange believes that it 

is reasonable and consistent with the 

Act to assess this Membership Fee to all 

Members because there are technical, 

regulatory, and administrative services 

associated with a market participant 

being a Member of the Exchange. As a 

self-regulatory organization, MEMX’s 

membership team reviews applicants to 

ensure that each applicant for 

membership meets the Exchange’s 

qualification criteria prior to approval. 

The membership team, in conjunction 

with the Regulatory Department, 

reviews the registration and 

qualification of an applicant’s 

associated persons, the applicant’s 

financial health, the validity of its 

clearing relationship, and its 

disciplinary history. The membership 

team also provides ongoing support to 

Members with respect to membership 

changes, registration, and other 

questions that commonly arise from 

Members regarding such matters. The 

Exchange believes that it is consistent 

with the Act to charge the $200 

Membership Fee as it is reasonable to 

cover costs of administering its 

membership program. 

The Exchange believes that charging a 

$1,000 Membership Fee for Order Entry 

Firms is consistent with the Act, 

because this fee is in line with what 

other options exchanges charge 

members of their options platform who 

are not Market Makers.16 For example, 

MEMX would charge $1,200 after 

January 1, 2024, to an Order Entry Firm. 

If the same market participant (i.e., not 

a market maker) wanted to join to trade 

on the BOX Options Exchange, they 

would be charged $1,500 monthly.17

The Exchange anticipates that Order 

Entry Firms will require more resources 

than Members of the Exchange’s 

equities platform due to various 

complexities inherent to the options 

markets, such as the process for Clearing 

Member Give Ups described in 

Exchange Rule 21.12 and the process for 

listing classes and strikes made 

available for trading on MEMX Options 

described in Rules 19.3 through 19.5. 

The Exchange also anticipates that 

Order Entry Firms that are proprietary 

trading firms will generate a high 

volume of message traffic, which will 

result in additional costs to the 

Exchange. 

The Exchange believes that charging a 

higher $7,000 Membership Fee for 

Market Makers on MEMX Options is 

consistent with the Act, because it is 

also in line with what other options 

exchanges charge members of their 

options platform who are Market 

Makers.18 As an example, MEMX would 

charge $7,200 monthly after January 1, 

2024, to a new Options Member who is 

a Market Maker. If the same market 

participant wanted to join NYSE Arca 

Options Exchange, they would be 

charged $8,000 monthly.19 Based upon 

the Exchange’s projections, the 

Exchange anticipates that Market 

Makers will consume the most 

bandwidth and Exchange resources and 

produce the highest volume of message 

traffic on the Exchange. The Exchange 

anticipates the volume of message traffic 

which is generated by Options Market 

Makers to be higher than the volume of 

message traffic generated by Options 

Order Entry Firms and additional 

functionality is offered: (i) to Market 

Makers only (e.g., bulk messages 

described in Exchange Rule 21.1(l)), or 

(ii) with Market Makers as the most 

likely market participants to employ 

such functionality (e.g., the Risk 

Monitor Mechanism described in 

Exchange Rule 21.16). The MEMX 

Options functionality for bulk messages 

allows Market Makers to submit up to 

20 two-sided quotes in a single bulk 

quote message and is only available to 

Market Makers registered with the 

Exchange.20 The Risk Monitor 

Mechanism is available to all Options 

Members but the Exchange anticipates 

that this functionality will be primarily 

used by Market Makers to manage their 

risk. Market Makers also require high 

touch network support services as 

provided by the Exchange and its staff. 

The Exchange anticipates that Order 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68765 

21An Order Entry Firm means those Options 

Members representing as agent Customer Orders on 

MEMX Options, and non-Market Maker Members 

conducting proprietary trading. Customer Orders 

are any orders for the account of a Priority 

Customer. ‘‘Priority Customer’’ means any person or 

entity that is neither a broker or dealer in securities 

nor a Professional. See Rule 16.1 of the MEMX 

Rulebook. 

22See supra notes 6 to 10. 

23For example, a market making firm could use 

a third-party connectivity service (where such 

third-party service is a Member of the Exchange) to 

route orders to the Exchange. 

24See infra note 27. 

25See U.S. Options Market Volume Summary, 

available at https://www.cboe.com/us/options/ 

market_statistics/market/2023-09-27/ (last visited 

September 27, 2023). Market share is the percentage 

of volume on a particular exchange relative to the 

total volume across all exchanges and indicates the 

amount of order flow directed to that exchange. 

26See Options Order Protection and Locked/ 

Crossed Market Plan (August 14, 2009), available at 

https://www.theocc.com/getmedia/7fc629d9-4e54- 

4b99-9f11-c0e4db1a2266/options_order_protection_

plan.pdf (last visited September 28, 2023). 

Entry Firms 21 will consume less 

Exchange resources and generate fewer 

costs to the Exchange. 

The Exchange notes that, while it 

anticipates that Market Makers will 

account for a vast majority of the costs 

and resources placed on the Exchange 

and its systems (as discussed herein), 

Market Makers continue to be valuable 

market participants on the exchanges as 

the options market is a quote-driven 

industry. The Exchange recognizes the 

value that Market Makers bring to the 

Exchange and particularly to the MEMX 

Options platform. The Exchange 

believes that incentivizing Market 

Makers to direct order flow to the 

Exchange will benefit all market 

participants by increasing liquidity on 

the Exchange. The Membership Fees 

proposed herein are meant to strike a 

balance between offsetting the costs 

which Market Makers will place on the 

Exchange and continuing to incentivize 

Market Makers to access and make 

markets on the Exchange. As such, the 

Exchange proposes to establish higher, 

separate Membership Fees for Market 

Makers that are more aligned with the 

costs and resources that Market Makers 

will place on the Exchange and its 

systems and will align the Membership 

Fees with those of the majority of other 

options exchanges.22

The Exchange proposes to charge a 

flat fee for Market Makers because it 

expects most Market Makers who trade 

on the Exchange to quote in many of the 

options classes available, and the 

Exchange wishes to structure the 

Membership Fee in order to incentivize 

these Market Makers to quote more. 

While some other exchanges have 

ranges of membership fees depending 

on the number of classes in which a 

Market Maker quotes, the Exchange 

believes that assessing a single 

Membership Fee for all Market Makers 

on MEMX Options will incentivize 

those Market Makers who already quote 

in a large number of classes to route 

more order flow to the Exchange. The 

Exchange believes that the proposed 

Membership Fees are consistent with 

the Act and will improve market quality 

and improve competitiveness for all 

market participants. 

The Exchange notes that there are 

material costs associated with providing 

the infrastructure, System functionality, 

and headcount to fully support access to 

the Exchange. The Exchange incurs 

technology expenses related to 

establishing and maintaining 

Information Security services, System 

upkeep, and regulatory services. While 

some of the expenses are fixed, much of 

the expenses are not fixed and increase 

as the expenses associated with access 

for Market Makers increase. For 

example, new Market Makers to the 

Exchange may require additional 

resources of the Exchange due to the 

volume of their activities (i.e., quote 

volumes, which are significantly higher 

on average than Order Entry Firms, thus 

leading to increased storage and 

capacity costs of the Exchange) and 

automatically will have access to 

additional features offered by the 

Exchange only to Market Makers free of 

charge (i.e., bulk message functionality 

as described above). As the total number 

of Market Makers increases, the 

Exchange may need to increase its data 

center footprint and consume additional 

power, resulting in increased costs 

charged by its third-party data center 

provider. As the cost to the Exchange to 

provide access to Market Makers will 

increase with the number of Market 

Makers, the Exchange believes the 

proposed Membership Fees are 

reasonable and consistent with the Act, 

in order to offset a portion of the costs 

to the Exchange associated with 

providing Market Makers access to the 

Exchange’s quote and order 

infrastructure. 

The Exchange proposes higher, 

separate fees for Market Makers that are 

more aligned with the costs and 

resource requirements which the 

Exchange anticipates Market Makers 

will place on the Exchange and its 

systems. As previously stated, while the 

Exchange anticipates that Market 

Makers will account for the majority of 

the System usage on the Exchange, 

because the options market is a quotedriven industry, the Exchange 

recognizes the value that Market Makers 

bring to the Exchange and wishes to 

attract Market Makers to join the 

Exchange as Members. As the options 

market is quote-driven, attracting 

Market Makers to the Exchange will 

create additional liquidity on the 

Exchange by encouraging Market 

Makers to quote in option classes. A 

market making firm does not need to be 

a member of the Exchange in order to 

route orders to the Exchange.23 The 

Exchange notes that it operates in a 

highly competitive market in which 

market participants can readily favor 

competing venues if they deem the fees 

on any particular venue to be excessive. 

The Exchange’s Membership Fees are 

restrained by competition. Many firms 

that actively trade on options markets 

are not currently Members of MEMX 

Options.24 No market makers are 

required by rule, regulation, or 

competitive forces to be a Market Maker 

on the Exchange and can choose not to 

access the Exchange if it is determined 

that the Exchange’s Membership Fees 

do not make business or economic sense 

for such market maker. In such an 

environment, the Exchange must 

continually adjust its fees to remain 

competitive with other exchanges. The 

Exchange believes that the proposed 

Membership Fees reflect this 

competitive environment. If the 

Exchange is incorrect in this 

assessment, that error will be reflected 

in the Exchange’s ability to compete 

with other options exchanges. 

There is ample evidence that the 

Exchange is subject to competitive 

constraints on the amount it can charge 

for Membership Fees. Of the 16 other 

operating options exchanges, none 

currently has more than a 19.2% market 

share.25 High levels of market share 

enhance the value of trading and 

membership. Market participants will 

distribute their transactions across 

exchanges according to their business 

needs. Market participants can and will 

choose where to become Members, as 

market participants do not need to 

become members of all exchanges and 

may utilize a third party to route their 

orders to the Exchange. Rather than 

becoming a Member of the exchange, a 

market participant could elect to have 

their orders routed to MEMX Options as 

nothing in the Options Order Protection 

and Locked/Crossed Market Plan 26

requires any market participant to 

become a member of any exchange. 

These competitive forces ensure that the 

Exchange cannot charge supracompetitive fees for membership. The 

Exchange expects that market 

participants will evaluate the 

Exchange’s ability to meet market 


lotter on DSK11XQN23PROD with NOTICES1
68766 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

27For example, in an August 2023 filing, MIAX 

Pearl noted that MIAX Pearl and its affiliated 

options markets, MIAX and MIAX Emerald, have a 

total of 47 members. See Securities Exchange Act 

Release No. 98180 (August 21, 2023), 88 FR 58404 

(August 25, 2023) (SR–PEARL–2023–35). In a July 

2023 filing, BZX Exchange noted that it has 61 

members who trade options, Cboe EDGX Exchange 

has 51 members who trade options, and Cboe C2 

has 52 Trading Permit Holders. See Securities 

Exchange Act Release No. 97928 (July 17, 2023), 88 

FR 47209 (August 21, 2023) (SR–CboeBZX–2023– 

047). Based on publicly available information, 

NYSE American Options has 71 members. See 

NYSE American Options Membership Directory, 

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

american-options/membership#directory (last 

visited September 27, 2023). Lastly, based on 

publicly available information, NYSE Arca Options 

has 68 members. See NYSE Arca Options 

Membership Directory, available at https://

www.nyse.com/markets/arca-options/ 

membership#directory (last visited September 27, 

2023). 

28See supra notes 6 to 10. 

29 In contrast, for example, MIAX Options charges 

a $2,500.00 one-time application fee for Electronic 

Exchange Members and a $3,000 one-time 

application fee for Market Makers. In addition, 

MIAX Options charges a $1,000 testing and 

certification fee for Electronic Exchange Members 

and a $2,500 testing and certification fee for Market 

Makers. See MIAX Options Fee Schedule, Section 

3, available at https://www.miaxglobal.com/ 

markets/us-options/miax-options/fees (last visited 

September 27, 2023). 

30See id. 

31See supra note 11. 

32See Securities Exchange Act Release No. 94894 

(May 11, 2022), 87 FR 29987 (May 17, 2022) (SR– 

BOX–2022–17) (stating, ‘‘[t]he Exchange established 

this lower (when compared to other options 

exchanges in the industry) Participant Fee in order 

to encourage market participants to become 

Participants of BOX . . .’’). See also, e.g., Securities 

Exchange Act Release No. 88211 (February 14, 

2020), 85 FR 9847 (February 20, 2020) (SR– 

participants’ needs through technology, 

functionality, and liquidity to determine 

whether such market participant will 

route flow to the Exchange. In fact, as 

a new entrant to the options industry, 

the Exchange is particularly subject to 

competitive forces and has carefully 

crafted its proposed Membership Fees 

with the goal of attracting order flow to 

the Exchange. In this environment, the 

Exchange has no ability to set 

Membership Fees at levels that would 

be deemed supra-competitive, as doing 

so would limit the Exchange’s ability to 

compete with larger, established 

competitors in the options market. 

At launch, the Exchange expects to 

have only around 30 Members of MEMX 

Options, which is lower than several 

other options exchanges.27 Competitive 

forces constrain what the Exchange can 

charge, because if the Exchange charges 

Membership Fees which market 

participants deem to be excessive, 

market participants would simply not 

become Members. 

As noted above, the proposed fees are 

also competitive with and in several 

cases significantly lower than the fees 

for membership imposed by several 

other options exchanges.28 The 

Exchange also does not charge and does 

not have any plan to charge several 

types of fees that are charged by other 

exchanges with respect to membership 

or participation on the exchange—for 

example, the Exchange does not charge 

an application fee for Membership or 

any testing or certification fees—further 

highlighting the reasonableness of the 

proposed Options Membership Fees.29

The Exchange believes that the 

proposed Options Membership Fees are 

equitably allocated and not unfairly 

discriminatory because they would be 

assessed uniformly across all firms that 

seek to become Members. Additionally, 

the Exchange believes that the proposed 

fees are not unfairly discriminatory 

because no broker-dealer is required to 

become a Member of the Exchange or to 

register as a Market Maker with the 

Exchange. Even if a broker dealer does 

become a Member of the Exchange, the 

proposed fees are not unfairly 

discriminatory because the proposed 

Membership Fees are designed to 

account for the costs to MEMX of 

providing support for the Member 

trading on MEMX Options and, in the 

case of Market Makers, to provide 

additional support which the Exchange 

anticipates Market Makers would 

require on MEMX Options. As between 

Order Entry Firms and Market Makers, 

the Exchange believes that the higher 

fee for Market Makers is reasonable, 

equitably allocated and not unfairly 

discriminatory because the Exchange 

notes that other options exchanges 

currently charge Market Makers higher 

monthly fees for membership than are 

charged to other members of their 

options platform.30

The vigorous competition among 

national securities exchanges provides 

many alternatives for firms to 

voluntarily decide whether membership 

to the Exchange is appropriate and 

worthwhile. At the time of launch, 

MEMX Options was the 17th national 

registered options exchange, and as 

noted above, no broker-dealer is 

required to become a Member of the 

Exchange. Notwithstanding the 

foregoing, the Exchange still believes 

that the proposed Membership Fee for 

Options Order Entry Firms of $1,000 per 

month and the proposed Membership 

Fee for Options Market Makers of 

$7,000 per month are reasonable, 

equitably allocated and not unfairly 

discriminatory, even for a broker-dealer 

that determines it should join the 

Exchange for business purposes, as 

those business reasons should 

presumably result in revenue capable of 

covering the proposed fee. 

The Exchange commenced operation 

of MEMX Options in September 2023. 

The Exchange notes that on June 30, 

2023, it filed to waive Membership Fees 

for all new Members of the Exchange 

until January 1, 2024, and it intends to 

keep this language in its fee schedule, 

thus any new Members of the Exchange 

will not be charged Membership Fees 

until January 1, 2024.31 The Exchange 

believes it is reasonable to similarly 

waive the proposed Options 

Membership Fees for new Members of 

the Exchange to provide an incentive for 

Options Trading Firms to apply for 

Exchange membership in connection 

with the launch of MEMX Options. The 

Exchange believes waiving the 

additional Options Membership Fees in 

addition to waiving the existing 

Membership Fees that apply to both 

Equities and Options is reasonable, 

equitable and not unfairly 

discriminatory in that it will apply 

uniformly to all new Members of the 

Exchange, and because the majority of 

the Exchange’s current Members joined 

at a time when the Exchange did not 

impose Membership Fees (also to 

incentivize such participants to join) 

and thus already received this benefit. 

Although the Exchange will not 

charge Membership Fees for new 

Members until January 2024, the 

Exchange proposes the Membership Fee 

structure to communicate its intent to 

charge Membership Fees beginning 

January 2024. As a new exchange 

entrant, the Exchange chooses not to 

charge for new Members to join the 

Exchange until January 2024 to 

encourage market participants to trade 

on the Exchange and experience the 

quality of the Exchange’s technology 

and trading functionality. This practice 

is not uncommon. New exchanges often 

do not charge fees or charge lower fees 

for certain services such as 

memberships/trading permits to attract 

order flow to an exchange, and later, 

once there is sufficient depth and 

breadth of liquidity, amend their fees to 

reflect the true value of those services, 

absorbing all costs to provide those 

services in the meantime. Allowing new 

exchange entrants time to build and 

sustain market share through various 

pricing incentives, before increasing 

non-transaction fees, encourages market 

entry and promotes competition. It also 

enables new exchanges to mature their 

markets and allow market participants 

to trade on the new exchanges without 

membership fees serving as a potential 

barrier to attracting memberships and 

order flow.32


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68767 

NYSENAT–2020–05) (initiating market data fees for 

the NYSE National exchange after initially setting 

such fees at zero). 33See supra notes 6 to 10. 

34 15 U.S.C. 78s(b)(3)(A)(ii). 

35 17 CFR 240.19b–4(f)(2). 

The waiver is also a protection to new 

Members. If new Members join the 

Exchange in order to participate on 

MEMX Options and subsequently 

decide that they do not want to continue 

trading on MEMX Options prior to 

January 2024, they can cancel their 

membership with the Exchange prior to 

such date. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange believes its proposed 

amendments would not result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

Intramarket Competition 

As it relates to the reorganization of 

the fee schedule and the Membership 

Fee waiver, as discussed above, the 

Exchange does not believe that the 

proposed changes would impose any 

burden on intramarket competition 

because such changes would encourage 

new participants to apply for Exchange 

membership, thereby enhancing 

liquidity and market quality on the 

Exchange, as well as enhancing the 

attractiveness of the Exchange as a 

trading venue. The proposed 

Membership Fees do not place certain 

market participants at a relative 

disadvantage to other market 

participants to impose a burden on 

competition. As noted above, all 

Members trading on any of the 

Exchange’s platforms will be assessed a 

$200 fee applicable to all Members, all 

Order Entry Firms trading on the 

Exchange’s options platform will be 

assessed the same $1,000 Membership 

Fee, and all Market Makers trading on 

the Exchange’s options platform will be 

assessed the same $7,000 Membership 

Fee. Also as previously noted, the 

Exchange anticipates that Market 

Makers will consume the most 

bandwidth and resources of the 

Exchange’s Systems, will transact the 

vast majority of the volume on the 

Exchange, and will require the most 

support services provided by Exchange 

staff. As opposed to Options Order 

Entry Firms, the Exchange anticipates 

that Market Makers will take up more 

Exchange resources than Order Entry 

Firms. As such, the Exchange does not 

believe charging Market Makers higher 

Membership Fees will impose a burden 

on intramarket competition. 

The Exchange does not believe that 

the proposed changes would impose 

any burden on intramarket competition 

because such changes will incentivize 

new participants to join the Exchange 

and the majority of the Exchange’s 

current members joined at a time when 

the Exchange did not impose 

Membership Fees (also to incentivize 

such participants to join), and thus have 

already received this benefit. The 

options markets are quote-driven 

markets and are dependent on liquidity 

providers for liquidity and price 

discovery. The proposal will be of 

particular importance in encouraging 

liquidity providers to become members 

of the Exchange, which may result in 

more trading opportunities, enhanced 

competition, and improved overall 

market quality on the Exchange. For the 

foregoing reasons, the Exchange believes 

the proposed changes would not impose 

any burden on intramarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Intermarket Competition 

As described above, the proposed 

reorganization of the fee schedule and 

Membership Fee waiver will incentive 

market participants to join the Exchange 

during the fee waiver period. 

Accordingly, the Exchange believes the 

proposal would not burden, but rather 

promote, intermarket competition by 

enabling it to better compete with other 

options exchanges at the time MEMX 

Options launches. 

The Exchange believes that adopting 

specific Membership Fees applicable to 

Options Trading Members does not 

place an undue burden on competition 

on other SROs that is not necessary or 

appropriate. As has been previously 

noted, other options exchanges have 

similar fees for their participants and 

several charge even higher rates.33 As a 

new entrant in an already highly 

competitive environment for equity 

options trading, MEMX does not have 

the market power necessary to set prices 

for services that are unreasonable or 

unfairly discriminatory in violation of 

the Exchange Act. The Exchange 

operates in a highly competitive market 

in which market participants can 

determine whether to join the Exchange 

based on the value compared to the cost 

of joining and maintain membership on 

the Exchange. 

As noted above, market making firms 

have no obligation to become market 

makers on all options exchanges. As a 

new options platform, the Exchange 

seeks to attract market making firms to 

become Members on the MEMX Options 

platform. If the Membership Fees 

charged are deemed too high by a 

market making firm, such market 

making firm can elect not to become a 

Member of the Exchange. The Exchange 

operates in a highly competitive market 

where market participants can favor an 

alternate venue if they deem the 

Exchange’s Membership Fees to be 

excessive. In such an environment the 

Exchange must continually review and 

adjust its fees and credits to remain 

competitive with other exchanges and to 

attract order flow. For the reasons 

described above, the Exchange believes 

that the proposed rule change reflects 

this competitive environment. 

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 34 and Rule 

19b–4(f)(2) 35 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 

change 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 (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

MEMX–2023–26 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. 


lotter on DSK11XQN23PROD with NOTICES1
68768 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

36 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 97905 

(July 13, 2023), 88 FR 46342 (‘‘Notice’’). Comments 

on the proposed rule change are available at: 

https://www.sec.gov/comments/sr-nasdaq-2023- 

016/srnasdaq2023016.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 98267, 

88 FR 61652 (Sept. 7, 2023). The Commission 

designated October 17, 2023, as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Notice, supra note 3. 

8See id. at 46342. iShares Delaware Trust 

Sponsor LLC (‘‘Sponsor’’), a Delaware limited 

liability company and an indirect subsidiary of 

BlackRock, Inc., is the sponsor of the Trust. 

9See id. 

10See id. at 46343. 

11See id. 

12 15 U.S.C. 78s(b)(2)(B). 

13 Id. 

14 15 U.S.C. 78f(b)(5). 

All submissions should refer to file 

number SR–MEMX–2023–26. 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 (https://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 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–MEMX–2023–26 and should be 

submitted on or before October 25, 

2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–22011 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98610; File No. SR– 

NASDAQ–2023–016] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To List and 

Trade Shares of the iShares Bitcoin 

Trust Under Nasdaq Rule 5711(d), 

Commodity-Based Trust Shares 

September 28, 2023. 

On June 29, 2023, The Nasdaq Stock 

Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the iShares Bitcoin Trust 

(‘‘Trust’’) under Nasdaq Rule 5711(d), 

Commodity-Based Trust Shares. The 

proposed rule change was published for 

comment in the Federal Register on July 

19, 2023.3

On August 31, 2023, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

I. Summary of the Proposal 

As described in more detail in the 

Notice,7 the Exchange proposes to list 

and trade the Shares of the Trust under 

Nasdaq Rule 5711(d), which governs the 

listing and trading of Commodity-Based 

Trust Shares on the Exchange. 

The investment objective of the Trust 

is to reflect generally the performance of 

the price of bitcoin before payment of 

the Trust’s expenses and liabilities.8

The assets of the Trust will consist 

primarily of bitcoin held by a custodian 

on behalf of the Trust.9 On each 

Business Day, as soon as practicable 

after 4:00 p.m. Eastern Time, the 

administrator of the Trust will evaluate 

the bitcoin held by the Trust as reflected 

by the CF Benchmarks Index and 

determine the net asset value of the 

Trust.10 The Trust will issue and 

redeem baskets of Shares on a 

continuous basis only in exchange for 

an amount of bitcoin determined by the 

trustee of the Trust.11

II. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

NASDAQ–2023–016 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 12 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of proceedings is appropriate 

at this time in view of the legal and 

policy issues raised by the proposed 

rule change, as discussed below. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,13 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

6(b)(5) of the Act, which requires, 

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 14

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following questions 

and asks commenters to submit data 


lotter on DSK11XQN23PROD with NOTICES1