Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 2655 

19 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). 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

PEARL–2021–60 and should be 

submitted on or before February 8, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–00773 Filed 1–14–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

January 20, 2021. 

PLACE: The meeting will be held via 

remote means and/or at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

In the event that the time, date, or 

location of this meeting changes, an 

announcement of the change, along with 

the new time, date, and/or place of the 

meeting will be posted on the 

Commission’s website at https://

www.sec.gov. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) 

and (10) and 17 CFR 200.402(a)(3), 

(a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and 

(a)(10), permit consideration of the 

scheduled matters at the closed meeting. 

The subject matter of the closed 

meeting will consist of the following 

topics: 

Institution and settlement of injunctive 

actions; 

Institution and settlement of 

administrative proceedings; 

Resolution of litigation claims; and 

Other matters relating to examinations 

and enforcement proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting agenda items that 

may consist of adjudicatory, 

examination, litigation, or regulatory 

matters. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information; please contact 

Vanessa A. Countryman from the Office 

of the Secretary at (202) 551–5400. 

Authority: 5 U.S.C. 552b. 

Dated: January 13, 2022. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2022–00920 Filed 1–13–22; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–93949; File No. SR–MEMX– 

2021–21] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule 

January 11, 2022. 

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 December 

30, 2021, 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 (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 on 

January 3, 2022. 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 Fee Schedule to: 

(i) Reduce the standard rebate 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’’); (ii) modify the Liquidity 

Provision Tiers by reducing the rebate 

for executions of Added Displayed 

Volume and modifying the required 

criteria under Liquidity Provision Tier 

1, modifying the required criteria under 

Liquidity Provision Tier 2, and adopting 

a new Liquidity Provision Tier 3; (iii) 

modify Liquidity Removal Tier 1 by 

increasing the fee for executions of 

orders in securities priced at or above 

$1.00 per share that remove liquidity 

from the Exchange (such orders, 

‘‘Removed Volume’’) and modifying the 

required criteria under such tier; (iv) 

modify the Displayed Liquidity 

Incentive (‘‘DLI’’) Tiers by reducing the 

rebates for executions of Added 

Displayed Volume under DLI Tiers 1 

and 2 and adopting a new additive 

rebate for executions of Added 

Displayed Volume applicable to DLI 

Tiers 1 and 2; and (v) modify the 

Exchange’s pricing for executions of 

orders in securities priced below $1.00 

per share that remove liquidity from the 

Exchange (such orders, ‘‘Removed SubDollar Volume’’) and orders in securities 

priced below $1.00 per share that add 

non-displayed liquidity to the Exchange 

(such orders, ‘‘Added Non-Displayed 

Sub-Dollar Volume’’). 

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 


khammond on DSKJM1Z7X2PROD with NOTICES
2656 Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 

4Market share percentage calculated as of 

December 29, 2021. The Exchange receives and 

processes data made available through consolidated 

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

5 Id. 

6This proposed standard pricing for executions of 

Added Displayed Volume is referred to by the 

Exchange on the Fee Schedule under the existing 

description ‘‘Added displayed volume’’ with a Fee 

Code of ‘‘B’’, ‘‘D’’ or ‘‘J’’, as applicable. 

7See, e.g., the NYSE Arca, Inc. equities trading 

fee schedule on its public website (available at 

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

nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), 

which reflects a standard rebate of $0.0020 per 

share for executions of orders in securities priced 

at or above $1.00 per share that add displayed 

liquidity; the Cboe BZX Exchange, Inc. (‘‘Cboe 

BZX’’) equities trading fee schedule on its public 

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

equities/membership/fee_schedule/bzx/), which 

reflects a standard rebate of $0.0018 per share for 

executions of orders in securities priced at or above 

$1.00 per share that add displayed liquidity; the 

Nasdaq Stock Market LLC Price List—Trading 

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

Trader.aspx?id=PriceListTrading2), which reflects a 

standard rebate of $0.0020 per share for executions 

of orders in Tape A and Tape B securities priced 

at or above $1.00 per share that add displayed 

liquidity and a standard rebate of $0.0015 per share 

for executions of orders in Tape C securities priced 

at or above $1.00 per share that add displayed 

liquidity. 

8The proposed 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. The Exchange notes 

that because the determination of whether a 

Member qualifies for a certain pricing tier for a 

particular month will not be made until after the 

month-end, the Exchange will provide the Fee 

Codes otherwise applicable to such transactions on 

the execution reports provided to Members during 

the month and will only designate the Fee Codes 

applicable to the achieved pricing tier on the 

monthly invoices, which are provided after such 

determination has been made, as the Exchange does 

for its tier-based pricing today. 

9As 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. 

10As 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. 

11As set forth on the Fee Schedule, ‘‘Step-Up 

ADAV’’ means ADAV in the relevant baseline 

month subtracted from current ADAV. 

has more than approximately 17% of 

the total market share of executed 

volume of equities trading.4 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 4% of the overall market 

share.5 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. 

Reduced Standard Rebate for Added 

Displayed Volume 

Currently, the Exchange provides a 

standard rebate of $0.0028 per share for 

executions of Added Displayed Volume. 

The Exchange now proposes to reduce 

the standard rebate for executions of 

Added Displayed Volume to $0.0022 

per share.6 The purpose of reducing the 

standard rebate for executions of Added 

Displayed Volume is for business and 

competitive reasons, as the Exchange 

believes that the reduction of such 

rebate would decrease the Exchange’s 

expenditures with respect to its 

transaction pricing in a manner that is 

still consistent with the Exchange’s 

overall pricing philosophy of 

encouraging added displayed liquidity. 

The Exchange notes that despite the 

reduction proposed herein, the 

proposed standard rebate for executions 

of Added Displayed Volume (i.e., 

$0.0022 per share) remains higher than, 

and competitive with, the standard 

rebates provided by other exchanges for 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.7

Liquidity Provision Tiers 

The Exchange currently offers 

Liquidity Provision Tiers in which 

qualifying Members are provided an 

enhanced rebate for executions of 

Added Displayed Volume by achieving 

certain specified volume criteria. Now, 

the Exchange proposes to modify its 

Liquidity Provision Tiers by reducing 

the rebate for executions of Added 

Displayed Volume and modifying the 

required criteria under Liquidity 

Provision Tier 1, modifying the required 

criteria under Liquidity Provision Tier 

2, and adopting a new Liquidity 

Provision Tier 3. 

First, the Exchange proposes to 

reduce the rebate for executions of 

Added Displayed Volume under 

Liquidity Provision Tier 1 from 

$0.00335 per share to $0.00325 per 

share.8 The Exchange believes that the 

proposed rebate represents only a 

modest decrease from the current rebate 

provided for executions of Added 

Displayed Volume under Liquidity 

Provision Tier 1. The purpose of 

reducing the enhanced rebate for 

executions of Added Displayed Volume 

under Liquidity Provision Tier 1 is for 

business and competitive reasons, as the 

Exchange believes the reduction of such 

rebate would decrease the Exchange’s 

expenditures with respect to its 

transaction pricing in a manner that is 

still consistent with the Exchange’s 

overall pricing philosophy of 

encouraging added displayed liquidity. 

The Exchange also proposes to modify 

the required criteria under Liquidity 

Provision Tier 1. Currently, a Member 

qualifies for Liquidity Provision Tier 1 

by achieving an ADAV 9 of at least 

0.20% of the TCV.10 Now, the Exchange 

proposes to modify this required criteria 

such that a Member would now qualify 

for Liquidity Provision Tier 1 by 

achieving an ADAV of at least 0.25% of 

the TCV. Thus, such proposed change 

would increase the ADAV threshold, 

which is designed to encourage 

Members to maintain or increase their 

orders that add liquidity on the 

Exchange. The Exchange believes that 

the tier, as proposed, would further 

incentivize increased order flow to the 

Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. 

Next, the Exchange proposes to 

modify the required criteria under 

Liquidity Provision Tier 2. Currently, a 

Member qualifies for Liquidity 

Provision Tier 2 by achieving an ADAV 

that is greater than or equal to 0.10% of 

the TCV. Now, the Exchange proposes 

to modify this required criteria such that 

a Member would now qualify for 

Liquidity Provision Tier 2 by achieving 

either: (1) An ADAV of at least 0.20% 

of the TCV; or (2) a Step-Up ADAV 11

from December 2021 of at least 0.05% 

of the TCV. Thus, such proposed 

changes would increase the ADAV 

threshold and provide an alternative 

Step-Up ADAV threshold that a Member 

may choose to achieve in order to 

qualify for Liquidity Provision Tier 2 

that is based on such Member increasing 

its ADAV above its December 2021 

ADAV, each of which is designed to 

encourage Members to maintain or 

increase their orders that add liquidity 

on the Exchange. The Exchange believes 

that the tier, as proposed, would further 

incentivize increased order flow to the 

Exchange, thereby promoting price 

discovery and contributing to a deeper 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 2657 

12The proposed pricing for Liquidity Provision 

Tier 3 is referred to by the Exchange on the Fee 

Schedule under the new description ‘‘Added 

displayed volume, Liquidity Provision Tier 3’’ with 

a Fee Code of ‘‘B3’’, ‘‘D3’’ or ‘‘J3’’, as applicable. 

13See the Exchange’s Fee Schedule (available at 

https://info.memxtrading.com/fee-schedule/) for 

additional details regarding the Exchange’s DLI 

Tiers and DLI Target Securities. 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). 

14The pricing for DLI Tier 1 is referred to by the 

Exchange on the Fee Schedule under the 

description ‘‘Added displayed volume, DLI Tier 1’’ 

with a Fee Code of ‘‘Bq1’’, ‘‘Bq1’’ or ‘‘Jq1’’, as 

applicable. The pricing for DLI Tier 2 is referred to 

by the Exchange on the Fee Schedule under the 

description ‘‘Added displayed volume, DLI Tier 2’’ 

with a Fee Code of ‘‘Bq2’’, ‘‘Dq2’’ or ‘‘Jq2’’, as 

applicable. 

and more liquid market to the benefit of 

all market participants. The Exchange 

does not propose to change the pricing 

under Liquidity Provision Tier 2. 

Additionally, the Exchange is 

proposing to adopt a new Liquidity 

Provision Tier 3 in which it would 

provide an enhanced rebate of $0.0027 

per share for executions of Added 

Displayed Volume for Members that 

qualify by achieving an ADAV of at least 

0.05% of the TCV.12 The Exchange 

proposes to provide Members that 

qualify for Liquidity Provision Tier 3 a 

rebate of 0.05% of the total dollar value 

of the transaction for executions of 

orders in securities priced below $1.00 

per share that add displayed liquidity to 

the Exchange, which is the same rebate 

that is applicable to such executions for 

all Members. The proposed Liquidity 

Provision Tier 3 is designed to 

encourage Members to maintain or 

increase their orders that add liquidity 

on the Exchange in order to qualify for 

an enhanced rebate for executions of 

Added Displayed Volume, which, in 

turn, the Exchange believes would 

encourage the submission of additional 

Added Displayed Volume to the 

Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. Further, the 

proposed new Liquidity Provision Tier 

3 would provide Members that would 

not qualify for Liquidity Provision Tiers 

1 and 2 with an opportunity to still 

qualify for an enhanced rebate for 

executions of Added Displayed Volume 

in a manner that, coupled with the 

higher enhanced rebates provided under 

Liquidity Provision Tiers 1 and 2, as 

described above, provides increasingly 

higher benefits for satisfying 

increasingly more stringent criteria. 

Liquidity Removal Tier 1 

Currently, the Exchange charges a 

standard fee of $0.0029 per share for 

executions of Removed Volume. The 

Exchange also currently offers Liquidity 

Removal Tier 1 in which qualifying 

Members are charged a lower fee of 

$0.0027 per share for executions of 

Removed Volume by achieving either: 

(1) A Step-Up ADAV from October 2021 

of at least 0.05% of the TCV; or (2) an 

ADV of at least 0.55% of the TCV. Now, 

the Exchange proposes to increase the 

fee charged for executions of Removed 

Volume under such tier and modify the 

required criteria under such tier. 

Specifically, the Exchange proposes to 

charge a fee of $0.0028 per share for 

executions of Removed Volume for 

Members that qualify for Liquidity 

Removal Tier 1 by achieving either: (1) 

An ADAV of at least 0.50% of the TCV; 

or (2) an ADV of at least 0.70% of the 

TCV. 

The Exchange believes that the 

proposed fee represents only a modest 

increase from the current fee charged for 

executions of Removed Volume under 

Liquidity Removal Tier 1. The purpose 

of increasing such fee is for business 

and competitive reasons, as the 

Exchange believes that increasing such 

fee would generate additional revenue 

to offset some of the costs associated 

with the Exchange’s current transaction 

pricing structure, which provides 

various rebates for liquidity-adding 

orders, and the Exchange’s operations 

generally, in a manner that is still 

consistent with the Exchange’s overall 

pricing philosophy of encouraging 

added liquidity. The Exchange notes 

that the proposed changes to the 

required criteria under Liquidity 

Removal Tier 1 would replace the 

current Step-Up ADAV threshold with 

an ADAV threshold that is not based on 

a Member’s ADAV from a prior month 

(but that is a higher percentage of the 

TCV) and would increase the alternative 

ADV threshold. Thus, the purpose of the 

proposed changes to the required 

criteria is to encourage Members to 

maintain or increase their order flow to 

the Exchange. The Exchange believes 

that the tier, as proposed, would further 

incentivize increased order flow to the 

Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. 

The Exchange notes that it is also 

proposing to change the fee charged 

under Liquidity Removal Tier 1 for 

executions of Removed Sub-Dollar 

Volume, as further described below. 

DLI Tiers and DLI Additive Rebate 

The Exchange currently offers DLI 

Tiers 1 and 2 in which qualifying 

Members are provided an enhanced 

rebate for executions of Added 

Displayed Volume. The DLI Tiers are 

designed to encourage Members, 

through the provision of such enhanced 

rebates 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 in a large number of securities, 

generally, and in a targeted group of 

securities (i.e., the DLI Target 

Securities), in particular, 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, 

including the DLI Target Securities 

specifically, and committing capital to 

support the execution of orders.13 Now, 

the Exchange proposes to modify its DLI 

Tiers by reducing the rebates for 

executions of Added Displayed Volume 

under DLI Tiers 1 and 2 and adopting 

a new additive rebate for executions of 

Added Displayed Volume applicable to 

DLI Tiers 1 and 2. 

First, the Exchange proposes to 

reduce the rebates for executions of 

Added Displayed Volume under DLI 

Tiers 1 and 2. Currently, the Exchange 

provides enhanced rebates of $0.0035 

per share under DLI Tier 1 and $0.0034 

per share under DLI Tier 2 for 

executions of Added Displayed Volume 

for Members that qualify for such 

tiers.14 Now, the Exchange proposes to 

reduce the rebate provided under DLI 

Tier 1 to $0.0033 per share and the 

rebate provided under DLI Tier 2 to 

$0.0031 per share. The Exchange is not 

proposing to modify the required 

criteria for a Member to qualify for DLI 

Tier 1 or DLI Tier 2, nor is the Exchange 

proposing to change the rebates 

provided under such tiers for executions 

of orders in securities priced below 

$1.00 per share that add displayed 

liquidity to the Exchange. The purpose 

of reducing the enhanced rebates 

provided under DLI Tiers 1 and 2 for 

executions of Added Displayed Volume 

is for business and competitive reasons, 

as the Exchange believes the reduction 

of such rebates would decrease the 

Exchange’s expenditures with respect to 

the Exchange’s transaction pricing in a 

manner that is still consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added liquidity and 

promoting the price discovery and 

market quality objectives of the DLI 

Tiers. 

The Exchange also proposes to revise 

the ‘‘Displayed Liquidity Incentive 

Tiers’’ heading on the Fee Schedule to 

read ‘‘Displayed Liquidity Incentive 


khammond on DSKJM1Z7X2PROD with NOTICES
2658 Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 

15This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the new 

description ‘‘DLI Additive Rebate’’ with a Fee Code 

of ‘‘Y’’ to be appended to the otherwise applicable 

Fee Code for qualifying executions (which include 

Fee Codes ‘‘Bq1’’, ‘‘Dq1’’, ‘‘Jq1’’, ‘‘Bq1X’’, ‘‘Dq1X’’, 

‘‘Jq1X’’, ‘‘Bq2’’, ‘‘Dq2’’, ‘‘Jq2’’, ‘‘Bq2X’’, ‘‘Dq2X’’, 

‘‘Jq2X’’). 

16Thus, a Member that qualifies for DLI Tier 1 

and the DLI Additive Rebate applicable to DLI Tier 

1 (by achieving an ADAV of at least 0.30% of the 

TCV) would receive a rebate of $0.0034 per share 

(which is the proposed $0.0033 per share rebate 

under DLI Tier 1, as described above, plus the 

$0.0001 per share DLI Additive Rebate) for 

executions of Added Displayed Volume, and a 

Member that qualifies for DLI Tier 2 and the DLI 

Additive Rebate applicable to DLI Tier 2 (by 

achieving an ADAV of at least 0.10% of the TCV) 

would receive a rebate of $0.0032 per share (which 

is the proposed $0.0031 per share rebate under DLI 

Tier 2, as described above, plus the $0.0001 per 

share DLI Additive Rebate) for executions of Added 

Displayed Volume. 

17The Exchange notes that such executions are 

also eligible to receive the $0.0002 per share 

additive rebate under the existing Targeted Step-Up 

Tier for Members that also qualify for such 

incentive. 

18The Exchange’s Targeted Step-Up Tier 

currently provides an additive rebate of $0.0002 per 

share for executions of added volume for Members 

that qualify for the Targeted Step-Up Tier by 

achieving one of two specified volume thresholds 

in certain designated securities. See the Exchange’s 

Fee Schedule (available at https://

info.memxtrading.com/fee-schedule/) for additional 

details regarding the Targeted Step-Up Tier. See 

also Securities Exchange Act Release No. 93554 

(November 10, 2021), 86 FR 64248 (November 17, 

2021) (SR–MEMX–2021–16) (notice of filing and 

immediate effectiveness of fee changes adopted by 

the Exchange, including the adoption of the 

Targeted Step-Up Tier). 

19This proposed pricing for Removed Sub-Dollar 

Volume is referred to by the Exchange on the Fee 

Schedule under the existing descriptions ‘‘Removed 

volume from MEMX Book’’ with a Fee Code of ‘‘R’’ 

and ‘‘Removed volume from MEMX Book, Liquidity 

Removal Tier 1’’ with a Fee Code of ‘‘R1’’, as 

applicable. 

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

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

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

schedule/bzx/), which reflects a standard fee of 

0.30% of the total dollar value of the transaction for 

executions of orders in securities priced below 

$1.00 per share that remove liquidity. 

21This proposed pricing for Added NonDisplayed Sub-Dollar Volume is referred to by the 

Exchange on the Fee Schedule under the existing 

descriptions ‘‘Added non-displayed volume’’ with 

a Fee Code of ‘‘H’’ and ‘‘Added non-displayed 

volume, Midpoint Peg’’ with a Fee Code of ‘‘M’’, as 

applicable. 

22See, e.g., the Cboe BZX equities trading fee 

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

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

schedule/bzx/), which reflects free executions as the 

standard pricing for orders in securities priced 

below $1.00 per share that add non-displayed 

liquidity; the Cboe EDGA Exchange, Inc. equities 

trading fee schedule on its public website (available 

at https://www.cboe.com/us/equities/membership/ 

fee_schedule/edga/), which reflects free executions 

as the standard pricing for orders in securities 

priced below $1.00 per share that add nondisplayed liquidity. 

23 15 U.S.C. 78f. 

24 15 U.S.C. 78f(b)(4) and (5). 

(DLI) Tiers’’ (i.e., to include the ‘‘DLI’’ 

abbreviation in a parenthetical) so that 

it is clear that references to ‘‘DLI’’ on the 

Fee Schedule are references to the 

Displayed Liquidity Incentive. 

Additionally, the Exchange is 

proposing to adopt a new additive 

rebate for executions of Added 

Displayed Volume applicable to DLI 

Tiers 1 and 2 (the ‘‘DLI Additive 

Rebate’’). Specifically, the proposed DLI 

Additive Rebate would provide an 

additive rebate of $0.0001 per share that 

is in addition the otherwise applicable 

rebate under DLI Tier 1 or DLI Tier 2 for 

a qualifying Member’s executions of 

Added Displayed Volume.15 As 

proposed, a Member that qualifies for 

DLI Tier 1 would qualify for the DLI 

Additive Rebate if such Member has an 

ADAV of at least 0.30% of the TCV, and 

a Member that qualifies for DLI Tier 2 

would qualify for the DLI Additive 

Rebate if such Member has an ADAV of 

at least 0.10% of the TCV.16 The 

Exchange notes that the DLI Additive 

Rebate would only apply to executions 

of Added Displayed Volume that would 

otherwise receive the rebate applicable 

under DLI Tier 1 or DLI Tier 2.17 The 

purpose of the proposed DLI Additive 

Rebate is to encourage Members that 

consistently quote at the NBBO on the 

Exchange (i.e., Members that qualify for 

DLI Tier 1 or DLI Tier 2) to also 

maintain or increase their orders that 

add liquidity on the Exchange in order 

to qualify for an additive rebate for 

executions of Added Displayed Volume, 

which, in turn, the Exchange believes 

would encourage the submission of 

additional Added Displayed Volume to 

the Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. The Exchange 

notes that the proposed DLI Additive 

Rebate is comparable to other volumebased incentives and discounts, which 

have been widely adopted by 

exchanges, including the Exchange, 

such as pricing tiers that provide a 

supplemental incentive for firms that 

achieve a specified volume threshold.18

Pricing for Certain Sub-Dollar Volume 

Currently, the Exchange charges a 

standard fee of 0.05% of the total dollar 

value of the transaction for executions 

of Removed Sub-Dollar Volume, which 

is the same fee that is applicable to all 

Members (including those that qualify 

for Liquidity Removal Tier 1). Now, the 

Exchange proposes to increase the 

standard fee charged to all Members 

(including those that qualify for 

Liquidity Removal Tier 1) for executions 

of Removed Sub-Dollar Volume to 

0.25% of the total dollar value of the 

transaction.19 The purpose of increasing 

the standard fee for executions of 

Removed Sub-Dollar Volume is for 

business and competitive reasons, as the 

Exchange believes that increasing such 

fee would generate additional revenue 

to offset some of the costs associated 

with the Exchange’s current transaction 

pricing structure, which provides 

various rebates for liquidity-adding 

orders, and the Exchange’s operations 

generally, in a manner that is still 

consistent with the Exchange’s overall 

pricing philosophy of encouraging 

added liquidity. The Exchange notes 

that despite the increase proposed 

herein, the proposed standard fee for 

executions of Removed Sub-Dollar 

Volume (i.e., 0.25% of the total dollar 

value of the transaction) remains lower 

than, and competitive with, the 

standard fee charged by at least one 

other equity exchange for executions of 

orders in securities priced below $1.00 

per share that remove liquidity.20

Currently, the Exchange provides a 

standard rebate of 0.05% of the total 

dollar value of the transaction for 

executions of orders (including 

Midpoint Peg orders) of Added NonDisplayed Sub-Dollar Volume. Now, the 

Exchange proposes to modify this 

standard pricing to provide for free 

executions of orders (including 

Midpoint Peg orders) of Added NonDisplayed Sub-Dollar Volume.21 The 

purpose of eliminating the standard 

rebate for executions of orders 

(including Midpoint Peg orders) of 

Added Non-Displayed Sub-Dollar 

Volume is for business and competitive 

reasons, as the Exchange believes the 

elimination of such rebate would 

decrease the Exchange’s expenditures 

with respect to the Exchange’s 

transaction pricing in a manner that is 

still consistent with the Exchange’s 

overall pricing philosophy of 

encouraging added displayed liquidity. 

The Exchange notes that multiple other 

equities exchanges currently provide 

standard pricing of free executions of 

orders in securities priced below $1.00 

per share that add non-displayed 

liquidity.22

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,23

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

6(b)(5) of the Act,24 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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 2659 

25Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 26See supra notes 7, 20, and 22. 

discrimination between customers, 

issuers, brokers, or dealers. 

As discussed above, the Exchange 

operates in a highly fragmented and 

competitive market in which market 

participants can readily direct order 

flow to competing venues if they deem 

fee levels at a particular venue to be 

excessive or incentives to be 

insufficient, and the Exchange 

represents only a small percentage of 

the overall market. The Commission and 

the courts have repeatedly expressed 

their preference for competition over 

regulatory intervention in determining 

prices, products, and services in the 

securities markets. In Regulation NMS, 

the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and also recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 25

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can shift order flow or discontinue to 

reduce use of certain categories of 

products, in response to new or 

different pricing structures being 

introduced into the market. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees and rebates, 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 incentivize market participants to 

direct additional order flow to the 

Exchange, which the Exchange believes 

would enhance liquidity and market 

quality on the Exchange to the benefit 

of all Members, as well as to decrease 

the Exchange’s expenditures and 

generate additional revenue with 

respect to its transaction pricing in a 

manner that is still consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added displayed 

liquidity. 

Regarding the proposed changes to 

the standard rates, the Exchange 

believes that reducing the standard 

rebate for executions of Added 

Displayed Volume, increasing the 

standard fee for executions of Removed 

Sub-Dollar Volume (including for 

Members that qualify for Liquidity 

Removal Tier 1), and eliminating the 

standard rebate (i.e., to provide free 

executions) for executions of orders 

(including Midpoint Peg orders) of 

Added Non-Displayed Sub-Dollar 

Volume are reasonable because, as 

indicated above, in order to operate in 

the highly competitive equities markets, 

the Exchange and its competing 

exchanges seek to offer similar pricing 

structures, including assessing 

comparable standard fees and rebates, as 

applicable, for executions of Added 

Displayed Volume, Removed Sub-Dollar 

Volume, and Added Non-Displayed 

Sub-Dollar Volume. Thus, the Exchange 

believes the proposed standard rate 

changes for executions of Added 

Displayed Volume, Removed Sub-Dollar 

Volume, and Added Non-Displayed 

Sub-Dollar Volume proposed herein are 

reasonable, as such rates are comparable 

to, and competitive with, the standard 

fees and rebates, as applicable, assessed 

for such executions on other equity 

exchanges.26 Further, the Exchange 

believes the proposed changes to reduce 

the standard rebates for executions of 

Added Displayed Volume and Added 

Non-Displayed Sub-Dollar Volume, as 

well as the proposed change to increase 

the standard fee for executions of 

Removed Sub-Dollar Volume, are 

reasonable because, as noted above, the 

Exchange believes such changes would 

decrease the Exchange’s expenditures 

and generate additional revenue with 

respect to its transaction pricing in a 

manner that is still consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added displayed 

liquidity. The Exchange also believes 

that the proposed changes to these 

standard rates represents an equitable 

allocation of fees and are not unfairly 

discriminatory because such standard 

rates will continue to apply equally to 

all Members. 

As noted above, volume-based 

incentives and discounts 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 discounts 

that are reasonably related to: (i) The 

value to an exchange’s market quality; 

(ii) associated higher levels of market 

activity, such as high levels of liquidity 

provision and/or growth patterns; and 

(iii) the introduction of higher volumes 

of orders into the price and volume 

discovery processes. 

In particular, the Exchange believes 

the proposed new Liquidity Provision 

Tier 3 is reasonable, equitable, and not 

unfairly discriminatory for these same 

reasons, as it provides Members with an 

additional incentive to achieve a certain 

volume threshold on the Exchange, is 

available to all Members and, as noted 

above, is designed to encourage 

Members to maintain or increase their 

orders that add liquidity on the 

Exchange in order to qualify for an 

enhanced rebate for executions of 

Added Displayed Volume, which, in 

turn, the Exchange believes would 

encourage the submission of additional 

Added Displayed Volume to the 

Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. Moreover, the 

Exchange believes the proposed new 

Liquidity Provision Tier 3 is a 

reasonable means to incentivize such 

increased activity, as it provides 

Members with an additional 

opportunity to qualify for an enhanced 

rebate for executions of Added 

Displayed Volume with less stringent 

criteria than Liquidity Provision Tiers 1 

and 2. The Exchange also believes that 

providing a rebate of 0.05% of the total 

dollar value of the transaction for 

executions of orders in securities priced 

below $1.00 per share that add 

displayed liquidity to the Exchange 

under proposed new Liquidity 

Provision Tier 3 is reasonable, equitable, 

and not unfairly discriminatory, as this 

is the same rebate that is applicable to 

such executions for all Members (i.e., 

including those that do not qualify for 

any Liquidity Provision Tier), which is 

also the case under the Exchange’s 

current pricing. 

The Exchange also believes the 

proposed changes to Liquidity Provision 

Tiers 1 and 2, including to reduce the 

rebate for executions of Added 

Displayed Volume and modify the 

required criteria under Liquidity 

Provision Tier 1 and to modify the 

required criteria under Liquidity 

Provision Tier 2, are reasonable, 

equitable, and not unfairly 

discriminatory for the same reasons 

applicable to volume-based incentives 

and discounts described above. 

Specifically, the Exchange believes the 

proposed new required criteria under 

Liquidity Provision Tiers 1 and 2 is 

reasonable, equitable, and not unfairly 

discriminatory because all Members 

will continue to be eligible to qualify for 

such tiers and have the opportunity to 

receive the corresponding enhanced 

rebates for executions of Added 

Displayed Volume if such criteria is 

achieved and, as noted above, such 

criteria is designed to encourage 

Members to maintain or increase their 

orders that add liquidity on the 


khammond on DSKJM1Z7X2PROD with NOTICES
2660 Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 

27See supra note 18. 

Exchange in order to qualify for an 

enhanced rebate for executions of 

Added Displayed Volume, which, in 

turn, the Exchange believes would 

encourage the submission of additional 

Added Displayed Volume to the 

Exchange, thereby promoting price 

discovery and contributing to a deeper 

and more liquid market to the benefit of 

all market participants. The Exchange 

also believes the proposed reduced 

rebate for executions of Added 

Displayed Volume and proposed new 

required criteria under Liquidity 

Provision Tier 1 and the proposed new 

required criteria under Liquidity 

Provision Tier 2 are reasonable and 

consistent with an equitable allocation 

of fees and rebates, in that such reduced 

rebate represents only a modest 

decrease from the current rebate for 

executions of Added Displayed Volume 

under Liquidity Provision Tier 1 (i.e., 

from $0.00335 per share to $0.00325 per 

share) and would decrease the 

Exchange’s expenditures with respect to 

its transaction pricing in a manner that 

is still consistent with the Exchange’s 

overall pricing philosophy of 

encouraging added displayed liquidity, 

and the more stringent criteria under 

such tiers correlates to, and is 

commensurate with, the corresponding 

tier’s higher rebate. 

Without having a view of activity on 

other markets and off-exchange venues, 

the Exchange has no way of knowing 

whether this proposed rule change 

would definitely result in any Members 

qualifying for the proposed Liquidity 

Provision Tiers. While the Exchange has 

no way of predicting with certainty how 

the proposed tiers will impact Member 

activity, the Exchange anticipates that 

multiple Members that currently qualify 

for Liquidity Provision Tiers 1 and 2 

would be able to satisfy the proposed 

new required criteria under such tiers, 

which the Exchange believes continues 

to be commensurate with the fees under 

such tiers, and that multiple additional 

Members would be able to satisfy the 

required criteria under proposed new 

Liquidity Provision Tier 3. The 

Exchange also notes that the proposed 

tiers will not adversely impact any 

Member’s ability to qualify for reduced 

fees or enhanced rebates offered under 

other pricing tiers. Should a Member 

not meet the proposed new criteria, the 

Member will merely not receive that 

corresponding enhanced rebate. 

The Exchange also believes the 

proposed changes to Liquidity Removal 

Tier 1, including to increase the fee 

charged for executions of Removed 

Volume and modify the required criteria 

under such tier, are reasonable, 

equitable, and not unfairly 

discriminatory for the same reasons 

applicable to volume-based incentives 

and discounts described above. 

Specifically, the Exchange believes the 

proposed new required criteria under 

Liquidity Removal Tier 1 is reasonable, 

equitable, and not unfairly 

discriminatory because all Members 

will continue to be eligible to qualify for 

such tier and have the opportunity to 

receive the corresponding lower fee for 

executions of Removed Volume if such 

criteria is achieved and, as noted above, 

such criteria is designed to encourage 

Members to maintain or increase their 

order flow to the Exchange, thereby 

promoting price discovery and 

contributing to a deeper and more liquid 

market to the benefit of all market 

participants. The Exchange also believes 

the proposed increased fee for 

executions of Removed Volume and 

proposed new required criteria under 

Liquidity Removal Tier 1 are reasonable 

and consistent with an equitable 

allocation of fees and rebates, in that 

such proposed fee represents only a 

modest increase from the current fee 

charged for executions of Removed 

Volume under Liquidity Removal Tier 1 

(i.e., from $0.0027 per share to $0.0028 

per share) and would generate 

additional revenue to offset some of the 

costs associated with the Exchange’s 

current transaction pricing in a manner 

that is still consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added displayed 

liquidity. 

Additionally, while the Exchange has 

no way of predicting with certainty how 

the proposed new required criteria 

under such tier will impact Member 

activity, the Exchange anticipates that 

most, if not all, of the Members that 

currently qualify for Liquidity Removal 

Tier 1 would continue to qualify under 

the proposed new criteria, which the 

Exchange believes continues to be 

commensurate with the proposed new 

fee under such tier. The Exchange also 

notes that the proposed tier will not 

adversely impact any Member’s ability 

to qualify for reduced fees or enhanced 

rebates offered under other pricing tiers. 

Should a Member not meet the 

proposed new criteria, the Member will 

merely not be charged the 

corresponding lower fee. 

The Exchange believes the proposed 

changes to reduce the rebates for 

executions of Added Displayed Volume 

under DLI Tiers 1 and 2 are reasonable, 

equitable, and not unfairly 

discriminatory for the same reasons 

applicable to volume-based incentives 

and discounts described above, as such 

rebates would continue to apply equally 

to all Members, in that all Members 

would continue to have the opportunity 

to achieve the required criteria under 

such tiers, which the Exchange is not 

proposing to modify with this proposal, 

and in turn, qualify for an enhanced 

rebate for executions of Added 

Displayed Volume, and the rebate 

provided under DLI Tier 1 will remain 

higher than the rebate provided under 

DLI Tier 2 commensurate with the more 

stringent criteria of DLI Tier 1 than of 

DLI Tier 2. The Exchange further 

believes that such proposed changes are 

reasonable and consistent with an 

equitable allocation of fees and rebates, 

as such reduced rebates are designed to 

decrease the Exchange’s expenditures 

with respect to its transaction pricing in 

a manner that is still consistent with the 

Exchange’s overall pricing philosophy 

of encouraging added displayed 

liquidity and promoting the price 

discovery and market quality objectives 

of the DLI Tiers described above. 

The Exchange also believes the 

proposed change to revise the 

‘‘Displayed Liquidity Incentive Tiers’’ 

heading on the Fee Schedule to read 

‘‘Displayed Liquidity Incentive (DLI) 

Tiers’’ (i.e., to include the ‘‘DLI’’ 

abbreviation in a parenthetical) is 

reasonable, equitable, and not unfairly 

discriminatory in that it is designed to 

make clear for all Members that 

references to ‘‘DLI’’ on the Fee Schedule 

are references to the Displayed Liquidity 

Incentive. 

As noted above, the Exchange 

believes that the proposed DLI Additive 

Rebate is similar to other volume-based 

incentives and discounts, which have 

been widely adopted by exchanges, 

including the Exchange,27 and thus, the 

Exchange believes the proposed new 

DLI Additive Rebate is reasonable, 

equitable, and not unfairly 

discriminatory for the same reasons 

applicable to volume-based incentives 

and discounts described above. 

Specifically, the Exchange believes the 

proposed DLI Additive Rebate is 

reasonable, equitable, and not unfairly 

discriminatory, as it provides Members 

that consistently quote at the NBBO on 

the Exchange (i.e., Members that qualify 

for DLI Tier 1 or DLI Tier 2) with an 

additional incentive to achieve a certain 

volume threshold on the Exchange, is 

available to all such Members, and, as 

noted above, is designed to encourage 

such Members to maintain or increase 

their orders that add liquidity on the 

Exchange in order to qualify for an 

additive rebate for executions of Added 

Displayed Volume, which, in turn, the 

Exchange believes would encourage the 

submission of additional Added 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 2661 

28 15 U.S.C. 78f(b)(4) and (5). 29See supra note 25. 

Displayed Volume to the Exchange, 

thereby promoting price discovery and 

contributing to a deeper and more liquid 

market to the benefit of all market 

participants. 

The Exchange also believes the 

proposed additive rebate for executions 

of Added Displayed Volume under the 

proposed DLI Additive Rebate (i.e., 

$0.0001 per share) is reasonable, in that 

it represents only a modest addition to 

the rebates otherwise applicable to 

executions of Added Displayed Volume 

for Members that qualify for DLI Tiers 

1 or 2 and, in conjunction with the other 

changes proposed herein, would not 

provide for a rebate that is higher than 

the current maximum rebate provided 

by the Exchange. While the proposed 

DLI Additive Rebate is only available to 

Members that also qualify for DLI Tiers 

1 or 2, the Exchange believes that it is 

reasonable, consistent with an equitable 

allocation of fees, and not unfairly 

discriminatory to provide such additive 

rebate only to such Members in 

recognition of the benefits that such 

Members provide to the Exchange and 

market participants by consistently 

quoting at the NBBO on the Exchange, 

as described above, particularly as the 

magnitude of the additive rebate is not 

unreasonably high and is, instead, 

reasonably related to the enhanced 

liquidity and market quality that such 

additive rebate is designed to achieve. 

Additionally, while the Exchange has 

no way of predicting with certainty how 

the proposed new DLI Additive Rebate 

will impact Member activity, the 

Exchange anticipates that several of the 

Members that currently qualify for DLI 

Tiers 1 or 2 would also satisfy the 

required criteria for the corresponding 

DLI Additive Rebate, which the 

Exchange believes to be commensurate 

with the proposed additive rebate in 

each case. The Exchange also notes that 

the proposed DLI Additive Rebate will 

not adversely impact any Member’s 

ability to qualify for reduced fees or 

enhanced rebates offered under other 

pricing tiers or incentives. Should a 

Member not meet the proposed required 

criteria, the Member will merely not 

receive the additive rebate. 

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. 

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 decrease the Exchange’s 

expenditures and generate additional 

revenue with respect to its transaction 

pricing and to encourage Members to 

maintain or increase their order flow on 

the Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue. 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

Intramarket Competition 

As discussed above, the Exchange 

believes that the proposal would 

incentivize Members to maintain or 

increase their order flow on the 

Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

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 Liquidity Provision 

Tiers, the DLI Tiers, and Liquidity 

Removal Tier 1, and thus receive the 

proposed enhanced rebates for 

executions of Added Displayed Volume 

or be charged the proposed lower fee for 

executions of Removed Volume, as 

applicable, would be available to all 

Members that meet the associated 

volume requirements in any month. As 

noted above, the Exchange believes that 

meeting the proposed new volume 

requirements of the Liquidity Provision 

Tiers and Liquidity Removal Tier 1 is 

attainable for several market 

participants, and the Exchange believes 

such thresholds are reasonably related 

to the enhanced liquidity and market 

quality that such tiers are designed to 

promote. Similarly, as described above, 

the Exchange anticipates that several of 

the Members that currently qualify for 

DLI Tiers 1 or 2 would also satisfy the 

required criteria for the corresponding 

DLI Additive Rebate, which the 

Exchange believes to be commensurate 

with the proposed additive rebate in 

each case, and the Exchange believes 

that it is appropriate for the proposed 

DLI Additive Rebate to be available only 

to Members that qualify for DLI Tier 1 

or DLI Tier 2 in recognition of the 

benefits that such Members provide to 

the Exchange and market participants, 

particularly as the magnitude of the 

additive rebate is not unreasonably high 

and is, instead, reasonably related to the 

enhanced liquidity and market quality 

that such additive rebate is designed to 

achieve. Lastly, as noted above, the 

proposed reduced standard rebates for 

executions of Added Displayed Volume 

and Added Non-Displayed Sub-Dollar 

Volume, as well as the proposed 

increased standard fee for executions of 

Removed Volume, would apply equally 

to all Members. 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 

17% 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 


khammond on DSKJM1Z7X2PROD with NOTICES
2662 Federal Register / Vol. 87, No. 11 / Tuesday, January 18, 2022 / Notices 

30See supra notes 7, 20, and 22. 

31See supra note 25. 

32NetCoalition 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)). 

33 15 U.S.C. 78s(b)(3)(A)(ii). 

34 17 CFR 240.19b–4(f)(2). 35 17 CFR 200.30–3(a)(12). 

flow. Moreover, the Exchange believes 

that the ever-shifting market share 

among the exchanges from month to 

month demonstrates that market 

participants can shift order flow or 

discontinue to reduce use of certain 

categories of products, in response to 

new or different pricing structures being 

introduced into the market. 

Accordingly, competitive forces 

constrain the Exchange’s transaction 

fees and rebates, including with respect 

to executions of Added Displayed 

Volume, Removed Volume, Removed 

Sub-Dollar Volume, and Added NonDisplayed Sub-Dollar Volume, 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 change is a competitive 

proposal through which the Exchange is 

seeking to decrease the Exchange’s 

expenditures and generate additional 

revenue with respect to its transaction 

pricing and to encourage additional 

order flow to the Exchange through 

volume-based incentives and discounts, 

which have been widely adopted by 

exchanges, and standard pricing that are 

comparable to, and competitive with, 

pricing for similar executions in place at 

other exchanges.30 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 standard pricing for 

executions of Added Displayed Volume, 

Removed Sub-Dollar Volume, and 

Added Non-Displayed Sub-Dollar 

Volume and similar pricing incentives 

and discounts to market participants 

that achieve certain volume criteria and 

thresholds. 

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.’’ 31 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’. . . .’’.32 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 33 and Rule 

19b–4(f)(2) 34 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MEMX–2021–21 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–2021–21. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. All submissions 

should refer to File Number SR–MEMX– 

2021–21 and should be submitted on or 

before February 8, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–00750 Filed 1–14–22; 8:45 am] 

BILLING CODE 8011–01–P 


khammond on DSKJM1Z7X2PROD with NOTICES