[Federal Register Volume 89, Number 200 (Wednesday, October 16, 2024)]
[Notices]
[Pages 83535-83541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23799]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101294; File No. SR-MEMX-2024-39]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule Concerning Equities Transaction Pricing

October 9, 2024.
    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 October 2, 2024, 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.
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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 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). 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.
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    \3\ See Exchange Rule 1.5(p).
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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.

[[Page 83536]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Fee 
Schedule to: (i) adopt a reduced fee for executions of Retail Orders 
\4\ in securities priced at or above $1.00 per share that remove 
liquidity from the Exchange; (ii) modify the Liquidity Provision Tiers 
by eliminating the current Liquidity Provision Tier 1 and increasing 
the rebate for the current Liquidity Provision Tier 2, which will be 
renamed Liquidity Provision Tier 1; (iii) modify NBBO Setter Tier 1 by 
increasing the additive rebate that would apply to a qualifying 
Member's executions of certain transactions, eliminating the additive 
rebate that would apply to a qualifying Member's executions of other 
transactions, and modifying the required criteria under such tier; (iv) 
modify the Tape B Volume Tier 1 by modifying the criteria under such 
tier; and (v) modify the Displayed Liquidity Incentive (DLI) Tiers by 
increasing the rebate and modifying the criteria under Displayed 
Liquidity Incentive Tier 1.\5\
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    \4\ A ``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).
    \5\ The Exchange initially filed the proposed Fee Schedule 
changes on September 30, 2024 (SR-MEMX-2024-37). On October 2, 2024, 
the Exchange withdrew that filing and submitted this proposal.
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    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 15.6% of the total market share 
of executed volume of equities trading.\6\ 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 approximately 2% of the overall 
market share.\7\ The Exchange in particular operates a ``Maker-Taker'' 
model whereby it provides rebates to Members that add liquidity to the 
Exchange and charges fees to Members that remove liquidity from the 
Exchange. The Fee Schedule sets forth the standard rebates and fees 
applied per share for orders that add and remove liquidity, 
respectively. Additionally, in response to the competitive environment, 
the Exchange also offers tiered pricing, which provides Members with 
opportunities to qualify for higher rebates or lower fees where certain 
volume criteria and thresholds are met. Tiered pricing provides an 
incremental incentive for Members to strive for higher tier levels, 
which provides increasingly higher benefits or discounts for satisfying 
increasingly more stringent criteria.
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    \6\ Market share percentage calculated as of September 30, 2024. 
The Exchange receives and processes data made available through 
consolidated data feeds (i.e., CTS and UTDF).
    \7\ Id.
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Removed Retail Volume Fee
    The Exchange currently charges a standard fee of $0.0030 per share 
for executions of orders in securities that remove liquidity from the 
Exchange (such orders, ``Removed Volume''). The Exchange now proposes 
to adopt a reduced fee of $0.0028 per share for executions of Retail 
Orders in securities priced at or above $1.00 per share that remove 
liquidity from the Exchange (such orders, ``Removed Retail 
Volume'').\8\ As proposed, executions of Removed Retail Volume in 
securities priced below $1.00 per share will be charged a fee of 0.28% 
of the total dollar value of the transaction, which is the same fee 
that is currently charged for all such executions.
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    \8\ The Exchange notes that it currently provides free 
executions (i.e., the Exchange charges no fee and provides no 
rebate) for executions of Retail Orders with a time-in-force 
(``TIF'') instruction of Day, Good-`til-Time (``GTT''), or Regular 
Hours Only (``RHO'') that remove liquidity from the Exchange upon 
entry into the System. It is not proposing to change that pricing as 
a part of this proposal and as such, this proposal shall only apply 
to Retail Orders with a TIF of Immediate-or-Cancel (``IOC'') or 
Fill-or-Kill (``FOK'').
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    The purpose of reducing the fee for executions of Removed Retail 
Volume is to incentivize Members to submit additional liquidity-
removing Retail Orders to the Exchange, thereby contributing to a 
deeper and more liquidity market to the benefit of all market 
participants and enhancing the attractiveness of the Exchange as a 
trading venue. The Exchange notes that the proposed lower fee for 
executions of Removed Retail Volume (i.e. $0.0028) is competitive with 
the fees charged for executions of liquidity-removing retail orders 
charged by other exchanges.\9\
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    \9\ See, e.g., the Cboe EDGX Exchange, Inc. equities trading fee 
schedule (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/), indicating a fee of $0.0030 per share for 
executions of retail orders that remove liquidity, and the MIAX 
Pearl Equities fee schedule (available at https://www.miaxglobal.com/markets/us-equities/pearl-equities/fees), 
indicating a fee of $0.00285 per share for executions of retail 
orders that remove liquidity.
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Liquidity Provision Tiers
    The Exchange currently provides a base rebate of $0.0015 per share 
for executions of orders in securities priced at or above $1.00 per 
share that add displayed liquidity to the Exchange (such orders, 
``Added Displayed Volume''). The Exchange also currently offers 
Liquidity Provision Tiers 1-6 under which a Member may receive an 
enhanced rebate for executions of Added Displayed Volume by achieving 
the corresponding required volume criteria for each such tier. The 
Exchange now proposes to modify the Liquidity Provision Tiers by 
eliminating the current Liquidity Provision Tier 1, deleting a footnote 
associated with the current Liquidity Provision Tier 1 in the 
Exchange's Fee Schedule, and re-numbering the existing Liquidity 
Provision Tiers 2-6 as Liquidity Provision Tiers 1-5 (hereinafter 
referred to as such). The applicable rebates and required criteria 
under Liquidity Provision Tiers 1-5 would remain unchanged, except for 
the rebate provided under the renamed Liquidity Provision Tier 1, which 
the Exchange is proposing to increase, as further described below.
    First, with respect to the existing Liquidity Provision Tier 1, the 
Exchange currently provides an enhanced rebate of $0.0034 per share for 
executions of Added Displayed Volume in securities priced at or above 
$1.00 for Members that either: (1) have an ADAV \10\ (excluding Retail 
Orders) that is equal to or greater than 0.50% of the TCV,\11\ or (2) a 
Step-Up ADAV \12\ from June 2024 (excluding Retail Orders) that is 
equal to or greater than 0.07% of the TCV in securities priced at or 
above $1.00 per share and an ADAV that is equal to or

[[Page 83537]]

greater than 0.20% of the TCV in securities priced at or above $1.00 
per share and a Remove ADV \13\ that is equal to or greater than 0.45% 
of the TCV. The Exchange now proposes to eliminate Liquidity Provision 
Tier 1, as the Exchange no longer wishes to, nor is it required to, 
maintain such tier.
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    \10\ As set forth on the Fee Schedule, ``ADAV'' means the 
average daily added volume calculated as the number of shares added 
per day, which is calculated on a monthly basis, and ``Displayed 
ADAV'' means ADAV with respect to displayed orders.
    \11\ As set forth on the Fee Schedule, ``TCV'' means total 
consolidated volume calculated as the volume reported by all 
exchanges and trade reporting facilities to a consolidated 
transaction reporting plan for the month for which the fees apply.
    \12\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means 
ADAV in the relevant baseline month subtracted from current ADAV.
    \13\ As set forth on the Fee Schedule, ``Remove ADV'' means ADV 
with respect to orders that remove liquidity.
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    With respect to the newly re-numbered Liquidity Provision Tier 
1,\14\ the Exchange currently provides an enhanced rebate of $0.0033 
per share for executions of Added Displayed Volume in securities priced 
at or above $1.00 per share for Members that qualify for such tier by 
achieving either: (1) an ADAV (excluding Retail Orders) that is equal 
to or greater than 0.40% of the TCV, or (2) an ADAV that is equal to or 
greater than 0.30% of the TCV in securities priced at or above $1.00 
per share and a Non-Displayed ADAV \15\ that is equal to or greater 
than 6,000,000 shares. The Exchange now proposes to increase the rebate 
for executions of Added Displayed Volume under Liquidity Provision Tier 
1 to $0.0034 per share. The Exchange is not proposing to change the 
criteria required to qualify for renamed Liquidity Provision Tier 1. 
The Exchange is also not proposing to change the rebate for executions 
of orders in securities priced below $1.00 per share under such tier.
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    \14\ The pricing for Liquidity Provision Tier 1 is referred to 
by the Exchange on the Fee Schedule under the existing description 
``Added displayed volume, Liquidity Provision Tier 1'' with a Fee 
Code of ``B1'', ``D1'' or ``J1'', as applicable, to be provided by 
the Exchange on the monthly invoices provided to Members.
    \15\ As set forth on the Fee Schedule, ``Non-Displayed ADAV'' 
means ADAV with respect to non-displayed orders (including orders 
subject to Display-Price Sliding that receive price improvement when 
executed and Midpoint Peg orders).
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    The tiered pricing structure for executions of Added Displayed 
Volume under the Liquidity Provision Tiers provides an incremental 
incentive for Members to strive for higher volume thresholds to receive 
higher enhanced rebates for such executions and, as such, is intended 
to encourage Members to maintain or increase their order flow, 
primarily in the form of liquidity-adding volume, to the Exchange, 
thereby contributing to a deeper and more liquid market to the benefit 
of all Members and market participants. The Exchange believes that the 
Liquidity Provision Tiers, as modified by the proposed changes 
described above, reflect a reasonable and competitive pricing structure 
that is right-sized and consistent with the Exchange's overall pricing 
philosophy of encouraging added and/or displayed liquidity. 
Specifically, the Exchange believes that, after giving effect to the 
proposed changes described above, the rebate for executions of Added 
Displayed Volume provided under each of the Liquidity Provision Tiers 
1-5 remains commensurate with the corresponding required criteria under 
each such tier and is reasonably related to the market quality benefits 
that each such tier is designed to achieve.
NBBO Setter Tier 1
    The Exchange currently offers NBBO Setter Tier 1 under which a 
Member may receive an additive rebate of $0.0002 per share for a 
qualifying Member's executions of Added Displayed Volume (other than 
Retail Orders) in securities priced at or above $1.00 per share that 
establish the NBBO and have a Fee Code B \16\ (such orders, ``Setter 
Volume''), and an additive rebate of $0.0001 per share for executions 
of Added Displayed Volume (other than Retail Orders) that do not 
establish the NBBO (i.e., Fee Codes D and J) \17\ by achieving: (1) an 
ADAV with respect to orders with Fee Code B that is equal to or greater 
than 5,000,000 shares; or (2) an ADAV with respect to orders with Fee 
Code B that is equal to or greater than 2,000,000 shares and an ADAV in 
securities priced at or above $1.00 per share (excluding Retail Orders) 
that is equal to or greater than 0.30% of the TCV in securities priced 
at or above over $1.00 per share. The Exchange now proposes to modify 
NBBO Setter Tier 1 by increasing the additive rebate that would apply 
to a qualifying Member's executions of Setter Volume (i.e. Fee Code B), 
eliminating the additive rebate that would apply to a qualifying 
Member's executions of Added Displayed Volume (other than Retail 
Orders) that have a Fee Code of D or J, and modifying the required 
criteria under such tier.
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    \16\ The Exchange notes that orders with Fee Code B include 
orders, other than Retail Orders, that establish the NBBO.
    \17\ The Exchange notes that orders with Fee Code J include 
orders, other than Retail Orders, that establish a new BBO on the 
Exchange that matches the NBBO first established on an away market. 
Orders with Fee Code D include orders that add displayed liquidity 
to the Exchange but that are not Fee Code B or J, and thus, orders 
with Fee Code B, D or J include all orders, other than Retail 
Orders, that add displayed liquidity to the Exchange.
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    First, the Exchange proposes to increase the additive rebate under 
NBBO Setter Tier 1 to $0.0003 per share for a qualifying Member's 
executions of Added Displayed Volume with a Fee Code of B. 
Additionally, the Exchange proposes to eliminate the additive rebate of 
$0.0001 per share for a qualifying Member's executions with a Fee Code 
of D or J, and as such, the additive rebate under NBBO Setter Tier 1 as 
proposed will only apply to a qualifying Member's executions of Added 
Displayed Volume with a Fee Code of B. The Exchange notes that when the 
NBBO Setter Tier was originally implemented by the Exchange, the 
additive rebate similarly only applied to executions with a Fee Code 
B,\18\ and as such, the purpose of eliminating the additive rebate is 
to revert back to the former application, as well as for business and 
competitive reasons, as the Exchange believes the elimination of such 
additive rebate would allow the Exchange to focus on incentivizing 
Setter Volume with a higher rebate while also decreasing the Exchange's 
expenditures with respect to the Exchange's transaction pricing, which 
would enable the Exchange to redirect future resources and funding into 
other incentives and tiers intended to incentive increased order flow.
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    \18\ See Securities Exchange Act Release No. 94394 (March 10, 
2022), 87 FR 14923 (March 16, 2022) (SR-MEMX-2022-01).
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    Second, the Exchange is proposing to modify the required criteria 
under NBBO Setter Tier 1. As noted above, currently, a Member qualifies 
for such tier by achieving (1) an ADAV with respect to orders with Fee 
Code B that is equal to or greater than 5,000,000 shares; or (2) an 
ADAV with respect to orders with Fee Code B that is equal to or greater 
than 2,000,000 shares and an ADAV in securities priced at or above 
$1.00 per share (excluding Retail Orders) that is equal to or greater 
than 0.30% of the TCV in securities priced at or above over $1.00 per 
share. Now, the Exchange proposes to modify the required criteria under 
NBBO Setter Tier 1 such that a Member would now qualify for such tier 
by achieving an ADAV with respect to orders with a Fee Code B that is 
equal to or greater than 0.05% of the TCV. Thus, such proposed change 
modifies the Fee Code B ADAV criteria in the first alternative from a 
share-based ADAV to a percentage of the TCV ADAV, and eliminates the 
second alternative criteria altogether.
    The Exchange believes that the proposed modified criteria provides 
an incremental incentive for Members to strive for higher ADAV in NBBO 
setting orders (i.e. Fee Code B) on the Exchange to receive the 
additive rebate for qualifying executions of Added Displayed Volume 
under such tier, and thus, it is designed to encourage Members that do 
not currently qualify for such tier to increase their overall

[[Page 83538]]

orders that add liquidity to the Exchange. The Exchange also believes 
that the criteria change reflects a reasonable and competitive pricing 
structure that is right-sized and consistent with the Exchange's 
overall pricing philosophy of encouraging added and/or displayed 
liquidity. The Exchange believes that the proposed modified criteria 
would further incentivize increased order flow to the Exchange, thereby 
contributing to a deeper and more liquid market to the benefit of all 
Members.
Tape B Volume Tier
    The Exchange currently offers Tape B Volume Tier 1 under which a 
Member may receive an additive rebate of $0.0002 per share for 
executions of Added Displayed Volume (excluding Retail Orders) in Tape 
B Securities (such orders, ``Tape B Volume'') by achieving a Tape B 
ADAV that is equal to or greater than 0.30% of the Tape B TCV 
(excluding Retail Orders).\19\ Now, the Exchange proposes to modify the 
required criteria under such tier such that a Member would qualify for 
such tier by achieving a Tape B ADAV that is equal to or greater than 
0.25% of the Tape B TCV (excluding Retail Orders).
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    \19\ The pricing for the Tape B Volume Tier is referred to by 
the Exchange on the Fee Schedule under the description ``Tape B 
Volume Tier'' with a Fee Code of ``b'' to be appended to the 
otherwise applicable Fee Code assigned by the Exchange on the 
monthly invoices for qualifying executions.
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    The purpose of modifying the required criteria is for business and 
competitive reasons, as the Exchange believes that such changes would 
facilitate Members to meet such tier by lowering the Tape B TCV 
requirement. The Exchange believes that the proposed changes would 
incentivize Members to submit additional order flow in Tape B 
Securities, thereby promoting price discovery and market quality on the 
Exchange.
Displayed Liquidity Incentive (``DLI'') Tiers
    The Exchange currently offers DLI Tiers 1 and 2 under which a 
Member may receive an enhanced rebate for executions of Added Displayed 
Volume by achieving the corresponding required criteria for each such 
tier. The DLI Tiers are designed to encourage Members, through the 
provision of an enhanced rebate for executions of Added Displayed 
Volume, to promote price discovery and market quality by quoting at the 
NBBO for a significant portion of each day (i.e., through the 
applicable quoting requirement \20\) in a broad base of securities 
(i.e., through the applicable securities requirement \21\), thereby 
benefitting the Exchange and investors by providing improved trading 
conditions for all market participants through narrower bid-ask spreads 
and increased depth of liquidity available at the NBBO in a broad base 
of securities and committing capital to support the execution of 
orders.\22\ Now, the Exchange proposes to modify DLI Tier 1 by 
modifying the required criteria and increasing the rebate for 
executions of Added Displayed Volume under such tier.
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    \20\ As set forth on the Fee Schedule, the term ``quoting 
requirement'' means the requirement that a Member's NBBO Time be at 
least 25%, and the term ``NBBO Time'' means the aggregate of the 
percentage of time during regular trading hours during which one of 
a Member's market participant identifiers (``MPIDs'') has a 
displayed order of at least one round lot at the national best bid 
or the national best offer.
    \21\ As set forth on the Fee Schedule, the term ``securities 
requirement'' means the requirement that a Member meets the quoting 
requirement in the applicable number of securities per trading day. 
Currently, each of DLI Tiers 1 and 2 has a securities requirement 
that may be achieved by a Member meeting the quoting requirement in 
the specified number of securities traded on the Exchange.
    \22\ See the Exchange's Fee Schedule (available at https://info.memxtrading.com/fee-schedule/) for additional details regarding 
the Exchange's DLI Tiers. See also Securities Exchange Act Release 
No. 92150 (June 10, 2021), 86 FR 32090 (June 16, 2021) (SR-MEMX-
2021-07) (notice of filing and immediate effectiveness of fee 
changes adopted by the Exchange, including the adoption of DLI).
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    Currently, under DLI Tier 1, the Exchange provides a rebate of 
$0.0031 per share for executions of Added Displayed Volume for Members 
that qualify for such tier by achieving: (1) an NBBO Time of at least 
25% in an average of at least 1,000 securities per trading day during 
the month; and (2) an ADAV equal to or greater than 0.10% of the TCV. 
Now, the Exchange proposes to modify the required criteria under DLI 
Tier 1 such that a Member would qualify for such tier by achieving: an 
NBBO time of at least 50% in an average of at least 1,000 securities 
per trading day during the month.\23\ The Exchange also proposes to 
increase the rebate for a qualifying Members' executions of Added 
Displayed Volume under DLI Tier 1 from $0.0031 per share to $0.0034 per 
share. \24\
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    \23\ The Exchange is also proposing to amend the definition of 
``quoting requirement'' under the Definitions and Notes section 
under the DLI Tiers pricing table on the fee schedule in light of 
this proposed increase in the NBBO time required to achieve DLI Tier 
1. Specifically, the Exchange is proposing that the term quoting 
requirement shall now mean the percentage of NBBO Time required 
under the relevant DLI Tier criteria (i.e., rather than including 
the numeric value of the required NBBO Time in the definition).
    \24\ The pricing for DLI Tier 1 is referred to by the Exchange 
on the Fee Schedule under the existing description ``Added displayed 
volume, DLI Tier 1'' with a Fee Code of Bq1, Bq1 or Jq1, as 
applicable.
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    The purpose of increasing the quoting requirement under DLI Tier 1 
is intended to encourage Members to promote price discovery and market 
quality by quoting at the NBBO for a significant portion of each day 
(i.e., through the applicable quoting requirement) in a large number of 
securities, thereby benefitting the Exchange and investors by providing 
improved trading conditions for all market participants through 
narrower bid-ask spreads and increased depth of liquidity available at 
the NBBO. The purpose of removing the former criteria (2) under DLI 
Tier 1 is intended to make it easier for Members to meet such tier and 
incentivize increased order flow to the Exchange in the form of orders 
at the NBBO. The purpose of increasing the rebate is similarly to 
incentivize increased order flow to the Exchange, including in the form 
of orders at the NBBO, thereby contributing to a deeper and more liquid 
market to the benefit of all market participants. The Exchange is not 
proposing to change the rebates provided under such tiers for 
executions of orders in securities priced below $1.00 per share.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\25\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\26\ in particular, 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 permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \25\ 15 U.S.C. 78f.
    \26\ 15 U.S.C. 78f(b)(4) and (5).
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    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

[[Page 83539]]

broader forms that are most important to investors and listed 
companies.'' \27\
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    \27\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005).
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    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, 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 
proposal reflects a reasonable and competitive pricing structure 
designed to encourage market participants to strive for higher volume 
on the Exchange, which the Exchange believes would promote price 
discovery and enhance liquidity and market quality on the Exchange to 
the benefit of all Members and market participants.
    The Exchange believes that its proposal to charge a reduced fee for 
executions of Removed Retail Volume is reasonable, equitable, and not 
unfairly discriminatory. Specifically, the Exchange believes such 
proposal is reasonable, as it is reasonably designed to incentivize 
Members to submit additional Retail Orders to the Exchange, thereby 
contributing to a deeper and more liquidity market to the benefit of 
all market participants and enhancing the attractiveness of the 
Exchange as a trading venue. Thus, the Exchange believes the proposal 
reflects a reasonable attempt to deepen liquidity on the Exchange, 
particularly as the Exchange believes the proposed reduction in the fee 
for executions of Removed Retail Volume (i.e., $0.0002 per share lower 
than the standard fee for Removed Volume) is not excessive and is 
instead reasonably related to the market quality benefits it is 
intended to achieve. The Exchange also believes that the proposed fee 
for executions of Removed Retail Volume is equitable and not unfairly 
discriminatory, as such fee would be charged uniformly to all 
executions of such orders for all Members.
    The Exchange notes that volume-based incentives (such as Liquidity 
Provision Tiers, NBBO Setter Tiers, the Tape B Volume Tier, and DLI 
Tiers) have been widely adopted by exchanges (including the Exchange), 
and are reasonable, equitable, and not unfairly discriminatory because 
they are open to all members on an equal basis and provide additional 
benefits or discount that are reasonably related to the value to an 
exchange's market quality associated with higher levels of market 
activity, such as higher levels of liquidity provision and/or growth 
patterns, and the introduction of higher volumes of orders into the 
price and volume discovery process. The Exchange believes that 
Liquidity Provision 1, as modified by the proposed change to the rebate 
under such tier, NBBO Setter Tier 1, as modified by the proposed 
removal of the additive rebate as it applies towards executions with 
Fee Codes D and J and the proposed changes to the required criteria 
under such tier, Tape B Volume Tier 1, as modified by the proposed 
changes to the required criteria under such tier, and DLI Tier 1, as 
modified by the proposed change to the rebate and required criteria 
under such tier, are reasonable, equitable and not unfairly 
discriminatory for these same reasons, as such tiers would provide 
Members with an incremental incentive to achieve certain volume 
thresholds on the Exchange, are available to all Members on an equal 
basis, and, as described above, are designed to encourage Members to 
maintain or increase their order flow, including in the form of 
displayed, liquidity-adding, and/or NBBO-setting orders to the Exchange 
in order to qualify for an enhanced rebate for executions of Added 
Displayed Volume or Setter Volume, as applicable, thereby contributing 
to a deeper, more liquid and well balanced market ecosystem on the 
Exchange to the benefit of all Members and market participants. The 
Exchange also believes that such tiers reflect a reasonable and 
equitable allocation of fees and rebates, as the Exchange believes that 
the enhanced rebate for executions of Added Displayed Volume under the 
proposed modified Liquidity Provision Tier 1, Tape B Volume Tier 1 and 
DLI Tier 1, and the additive rebate for executions of Setter Volume 
under the proposed modified NBBO Setter Tier 1, each remain 
commensurate with the corresponding required criteria under each such 
tier and is reasonably related to the market quality benefits that each 
such tier is designed to achieve, as described above.
    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act \28\ 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 is subject to significant competitive forces, and that the 
proposed fees and rebates described herein are appropriate to address 
such forces.
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    \28\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal 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 proposal is intended to incentivize market participants to direct 
additional order flow to the Exchange, which the Exchange believes 
would promote price discovery and enhance liquidity and market quality 
on the Exchange to the benefit of all Members and market participants. 
As a result, the Exchange believes the proposal would enhance its 
competitiveness as a market that attracts actionable orders, thereby 
making it a more desirable destination venue for its customers. For 
these reasons, the Exchange believes that the proposal 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.'' \29\
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    \29\ See supra note 26.
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Intramarket Competition

    As discussed above, the Exchange believes that the proposal would 
maintain a tiered pricing structure that is still consistent with the 
Exchange's overall pricing philosophy of encouraging added and/or 
displayed liquidity and would incentivize market participants to direct 
additional order flow to the Exchange through volume-based tiers, 
thereby enhancing liquidity and market quality on the Exchange to the 
benefit of all Members, as well as enhancing the attractiveness of the 
Exchange as a trading venue, which the Exchange believes, in turn, 
would continue to encourage market participants to direct additional 
order flow to the Exchange. Greater liquidity benefits all Members by 
providing more trading opportunities and encourages Members to send 
additional orders to the Exchange, thereby contributing to

[[Page 83540]]

robust levels of liquidity, which benefits all market participants.
    The Exchange does not believe that the proposed changes would 
impose any burden on intramarket competition because such changes will 
incentivize members to submit additional order flow, thereby 
contributing to a more robust and well-balanced market ecosystem on the 
Exchange to the benefit of all Members as well as enhancing the 
attractiveness of the Exchange as a trading venue, which the Exchange 
believes, in turn, would continue to encourage market participants to 
direct additional order flow to the Exchange. Greater liquidity 
benefits all Members by providing more trading opportunities and 
encourages Members to send additional orders to the Exchange, thereby 
contributing to robust levels of liquidity, which benefits all market 
participants. The opportunity to qualify for the modified Liquidity 
Provision Tiers, NBBO Setter Tiers, Tape B Volume Tier, and DLI Tiers, 
and thus receive the corresponding enhanced rebates or discounted fees, 
as applicable, would be available to all Members that meet the 
associated volume requirements in any month. As described above, the 
Exchange believes that the required criteria under each such tier are 
commensurate with the corresponding rebate under such tier and are 
reasonably related to the enhanced liquidity and market quality that 
such tier is designed to promote. The Exchange does not believe that 
the proposed change to adopt a reduced fee for executions of Removed 
Retail Volume would impose any burden on intramarket competition 
because such changes will apply to all Members uniformly, in that the 
opportunity to qualify for the discounted fees is available to all 
Members that submit Retail Orders to 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 noted above, the Exchange 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. 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 15.6% of the total market share of executed volume of 
equities trading. 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 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 represent a competitive proposal 
through which the Exchange is seeking to incentivize market 
participants to direct additional order flow to the Exchange through 
volume-based tiers, which have been widely adopted by exchanges, 
including the Exchange. Accordingly, the Exchange believes the proposal 
would not burden, but rather promote, intermarket competition by 
enabling it to better compete with other exchanges that offer similar 
pricing structures and incentives to market participants.
    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.'' \30\ 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 broker-dealers 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' . . . . ''.\31\ Accordingly, the Exchange does not believe its 
proposed pricing changes impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
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    \30\ See supra note 26.
    \31\ NetCoalition 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)).
---------------------------------------------------------------------------

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 \32\ and Rule 19b-4(f)(2) \33\ thereunder.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \33\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#e99b9c858cc48a8684848c879d9aa99a8c8ac78e869f"><span class="__cf_email__" data-cfemail="a9dbdcc5cc84cac6c4c4ccc7dddae9daccca87cec6df">[email protected]</span></a>. Please include 
file number SR-MEMX-2024-39 on the subject line.

Paper Comments

    <bullet> 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-2024-39. This file

[[Page 83541]]

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-2024-39 and should be 
submitted on or before November 6, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
---------------------------------------------------------------------------

    \34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-23799 Filed 10-15-24; 8:45 am]
BILLING CODE 8011-01-P


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