84218 Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

4MEMX Options provides Fee Code ‘‘N’’ for 

transactions in Non-Penny options. Fee Codes are 

provided by the Exchange on the monthly invoices 

provided to Options Members. 

5MEMX Options provides Fee Code ‘‘D’’ for 

transactions which add liquidity to the MEMX 

Options Book. 

6Customer capacity applies to any order 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. MEMX Options 

provides fee qualifier ‘‘c’’ for Customer transactions. 

7Market share percentage calculated as of 

September 30, 2024. The Exchange receives and 

processes data made available through the 

consolidated data feeds (i.e., OPRA). 

8See, e.g., note 10 of the of the Nasdaq Options 

Market trading fee schedule on its public website 

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

rulebook/nasdaq/rules/nasdaq-options-7) which 

reflects a $1.15 per contract Rebate to Add Liquidity 

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–PEARL–2024–48 and should be 

submitted on or before November 12, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–24206 Filed 10–18–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101338; File No. SR– 

MEMX–2024–38] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Fee Schedule 

Concerning Options Transaction Fees 

October 15, 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 

September 30, 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. 

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 pursuant to 

Exchange Rules 15.1(a) and (c). The 

Exchange proposes to implement the 

changes to the MEMX Options Fee 

Schedule (the ‘‘Options 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 

The purpose of the proposed rule 

change is to amend the Options Fee 

Schedule to increase the transaction 

rebate for executions of contracts where 

the underlying security of the applicable 

option is not in the Penny Interval 

program (‘‘Non-Penny options’’) 4 which 

add liquidity to the MEMX Options 

Book 5 and which are made in the 

Customer capacity (‘‘Customer’’),6 as 

further described below. 

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. The 

Exchange is one of only 17 options 

venues to which market participants 

may direct their order flow. Based on 

publicly available information, no single 

options exchange has more than 

approximately 17% of the market share 

and currently the Exchange represents 

only approximately 3% of the market 

share.7 In such a low-concentrated and 

highly competitive market, no single 

options exchange, including the 

Exchange, possesses significant pricing 

power in the execution of option order 

flow. The Exchange believes that the 

ever-shifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow, discontinue, or 

reduce use of certain categories of 

products in response to fee changes. 

Accordingly competitive forces 

constrain the Exchange’s transaction 

fees, and market participants can readily 

trade on competing venues if they deem 

pricing levels at those other venues to 

be more favorable. The Exchange’s Fee 

Schedule sets forth standard rebates and 

rates applied per contract. 

Increased Transaction Rebate for 

Executions of Non-Penny Options in the 

Customer Capacity Which Add 

Liquidity to the MEMX Options Book 

Currently, the Exchange provides a 

standard transaction rebate of $1.15 per 

contract on Non-Penny options (as 

defined above) in the Customer capacity 

which add liquidity to the MEMX 

Options Book. Now, the Exchange 

proposes to amend the standard 

transaction rebate on such contracts 

from $1.15 per contract to $1.19 per 

contract. The purpose of increasing the 

rebate is to incentivize Members to 

execute additional contracts in NonPenny names in the Customer capacity 

which add liquidity. The Exchange’s 

proposal is designed to encourage the 

execution of additional contracts on the 

Exchange in order to enhance volume, 

deepen liquidity and promote price 

discovery on the MEMX Options 

platform. The Exchange believes that 

the increased rebate is in line with or 

exceeds the rebates provided by other 

national securities exchanges and will 

incentivize Members to route additional 

order flow to the Exchange.8


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Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Notices 84219 

in Non-Penny Symbols as Customer for Nasdaq 

Options Market participants who meet certain 

volume requirements on the Nasdaq Options 

Market. As MEMX Options is a comparatively new 

market, the Exchange believes that providing a 

higher rebate ($1.19) for Customer executions 

which add liquidity in Non-Penny options without 

requiring Members to achieve specific volume 

requirements will incentivize additional order flow 

to the Exchange. 

9 15 U.S.C. 78f. 

10 15 U.S.C. 78f(b)(4) and (5). 

11Securities Exchange Act Release No. 51808 

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

12See supra note 8. 

13The Exchange notes that, since the inception of 

MEMX Options, it has historically imposed 

different, and higher, transaction fees for executions 

in the non-Customer capacity than for executions in 

the Customer capacity. Similarly, since the 

inception of MEMX Options, the Exchange has 

historically provided different, and lower, rebates 

for executions in the non-Customer capacity than in 

the Customer capacity. See Securities Exchange Act 

Release No. 34–98533 (September 26, 2023), 88 FR 

67846 (October 2, 2023) (adopting a $1.10 per 

contract fee for non-Customers (Market Makers, 

Professionals, Firms, Away Market Makers, and 

Broker-Dealers) to remove liquidity in Non-Penny 

options as compared to a $0.85 per contract fee for 

Customers to remove liquidity in Non-Penny 

options, and a $0.80 per contract rebate for nonCustomers to add liquidity in Non-Penny options as 

compared to a $1.04 per contract rebate for 

Customers to add liquidity in Non-Penny options. 

The Exchange notes that similar fee structures are 

common at other options exchanges. See, e.g., the 

Cboe BZX Options fee schedule on its public 

website (available at: https://www.cboe.com/us/ 

options/membership/fee_schedule/bzx/), which 

reflects a higher $1.15 fee for Professional, Firm, 

Broker-Dealer, JBO, Market Maker, and Away 

Market Maker executions which remove liquidity in 

Non-Penny options and a lower $0.85 fee for 

Customer executions which remove liquidity in 

Non-Penny options. The Cboe BZX Options fee 

schedule also reflects lower rebates ranging from 

$0.30 to $0.88 for non-Customer executions which 

add liquidity in non-Penny options and a higher 

$1.05 rebate for Customer executions which add 

liquidity in Non-Penny options. 

14 15 U.S.C. 78f(b)(4) and (5). 

15See supra note 8. 

16See supra note 11. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Options Fee 

Schedule is consistent with the 

provisions of Section 6 of the Act,9 in 

general, and with Sections 6(b)(4) and 

6(b)(5) of the Act,10 in particular, in that 

it provides for the equitable allocation 

of reasonable dues, fees and other 

charges among Options Members and 

other persons using its facilities. The 

Exchange also believes the proposal 

furthers the objectives of Section 6(b)(5) 

of the Act in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

MEMX Options operates in a highly 

fragmented and competitive market in 

which market participants can readily 

direct order flow to competing venues if 

they deem fee levels at a particular 

venue to be excessive or incentives to be 

insufficient, and the Exchange 

represents only a small percentage of 

the overall market. The Commission and 

the courts have repeatedly expressed 

their preference for competition over 

regulatory intervention in determining 

prices, products, and services in the 

securities markets. In Regulation NMS, 

the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and also recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 11

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 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 the 

proposed change to increase the rebate 

for executions on Non-Penny options in 

the Customer capacity that add liquidity 

to the Exchange to $1.19 per contract is 

reasonable and equitable because it is 

designed to incentivize Members to 

submit additional liquidity-adding 

orders in Non-Penny options to the 

Exchange in the Customer capacity, 

which would enhance liquidity on the 

Exchange and promote price discovery 

and price formation, and would be 

applicable to all Members. The 

Exchange further believes the proposed 

increased rebate is appropriate because 

it exceeds or is comparable to, and 

competitive with, the rebates provided 

by other exchanges for executions in the 

Customer capacity in Non-Penny 

options which add liquidity.12

Further, the Exchange believes it is 

reasonable, equitable, and not unfairly 

discriminatory for Members to receive a 

higher rebate for executions of contracts 

in Non-Penny options in the Customer 

capacity which add liquidity to the 

Exchange, as compared to the rebate 

provided for executions of contracts in 

Non-Penny options in non-Customer 

capacities (i.e., Market Maker, 

Professional, Firm, Away Market Maker, 

or Broker-Dealer capacities) which add 

liquidity to the Exchange. The securities 

markets generally, and the Exchange in 

particular, have historically aimed to 

improve markets for investors and 

develop various features within the 

market structure for the benefit of public 

customers (i.e., the Customer capacity 

on the Exchange) who are not 

professionals.13 The Exchange believes 

it promotes the best interests of 

investors to charge lower transaction 

costs and provide higher rebates for 

Customers, who are not Professionals, 

and that the Exchange’s proposed fee 

structure provides right-sized incentives 

which will continue to attract Customer 

order flow to the Exchange. 

For the reasons discussed above, the 

Exchange submits that its proposed 

change to the Options Transaction Fee 

Schedule satisfies the requirements of 

Sections 6(b)(4) and 6(b)(5) of the Act 14

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 are 

not designed to unfairly discriminate 

between customers, issuers, brokers, or 

dealers. As described more fully below 

in the Exchange’s statement regarding 

burden on competition, the Exchange 

believes that its transaction pricing is 

subject to significant competitive forces, 

and that the proposed rebate described 

herein is appropriate to address such 

forces. 

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. As a relatively new 

entrant in the already highly 

competitive environment for options 

trading, the Exchange believes that the 

proposed change would encourage the 

submission of additional order flow to 

the Exchange, thereby promoting market 

depth, execution incentives and 

enhanced execution opportunities, as 

well as price discovery and 

transparency for all Members. Further, 

MEMX Options’ proposed modified 

transaction rebate exceeds or is 

comparable to the transaction rebates 

assessed by other options exchanges.15

As a result, 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.’’ 16


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84220 Federal Register / Vol. 89, No. 203 / Monday, October 21, 2024 / Notices 

17See supra note 11. 

18NetCoalition 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)). 

19 15 U.S.C. 78s(b)(3)(A)(ii). 

20 17 CFR 240.19b–4(f)(2). 21 17 CFR 200.30–3(a)(12). 

Intramarket Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on intramarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act 

because the proposed rebate applies 

equally to all Options Members. The 

proposed pricing structure is intended 

to encourage participants to trade on 

MEMX Options by providing rebates 

that are comparable to those offered by 

other exchanges as well as providing 

competitive fees. The Exchange believes 

that the proposed rebate will help to 

encourage Options Members to send 

orders to the Exchange to the benefit of 

all Exchange participants. As the 

proposed rebate is equally applicable to 

all market participants, the Exchange 

does not believe there is any burden on 

intramarket competition. 

Intermarket Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on intermarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

To the contrary, the Exchange believes 

that the proposed pricing structure will 

increase competition and is intended to 

encourage market participants to trade 

on the exchange by providing rebates 

that are comparable to those offered by 

other exchanges, which the Exchange 

believes will help to encourage 

Members to send orders to the Exchange 

to the benefit of all Exchange 

participants. As the proposed rebate is 

equally applicable to all market 

participants, the Exchange does not 

believe there is any burden on 

intramarket competition. 

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.’’ 17 The 

fact that this market is competitive has 

also long been recognized by the courts. 

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

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

that competition for order flow is 

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

the U.S. national market system, buyers 

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

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’. . . .’’.18 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. 

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 19 and Rule 

19b–4(f)(2) 20 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–2024–38 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–MEMX–2024–38. 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–2024–38 and should be 

submitted on or before November 12, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–24204 Filed 10–18–24; 8:45 am] 

BILLING CODE 8011–01–P 


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