Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 14923 

151See Exchange Act Section 19(b)(2)(C), 15 

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

152See SolidX Order, 82 FR 16259; VanEck Order, 

86 FR 54550–51; WisdomTree Order, 86 FR 69344; 

Kryptoin Order, 86 FR 74179; Valkyrie Order, 86 FR 

74163; SkyBridge Order, 87 FR 3881; Wise Origin 

Order, 87 FR 5538. 

153See supra note 132. 

154See 15 U.S.C. 78s(b)(2)(C). 

155 15 U.S.C. 78f(b)(5). 

156 In disapproving the proposed rule change, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

157See letter from Sam Ahn (Aug. 31, 2021). 

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

2 17 CFR 240.19b–4. 

3See Exchange Rule 1.5(p). 

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

principal order that meets the criteria of FINRA 

Continued 

Exchange Act—including the 

requirement under Section 6(b)(5) that 

the rules of a national securities 

exchange be designed to prevent 

fraudulent and manipulative acts and 

practices—and it must disapprove the 

filing if it does not make such a 

finding.151 Thus, even if a proposed rule 

change purports to protect investors 

from a particular type of investment 

risk—such as the susceptibility of an 

asset to loss or theft—the proposed rule 

change may still fail to meet the 

requirements under the Exchange 

Act.152

Here, even if it were true that, 

compared to trading in unregulated 

bitcoin spot markets, trading a bitcoinbased ETP on a national securities 

exchange provides some additional 

protection to investors, the Commission 

must consider this potential benefit in 

the broader context of whether the 

proposal meets each of the applicable 

requirements of the Exchange Act.153 As 

explained above, for bitcoin-based ETPs, 

the Commission has consistently 

required that the listing exchange have 

a comprehensive surveillance-sharing 

agreement with a regulated market of 

significant size related to bitcoin, or 

demonstrate that other means to prevent 

fraudulent and manipulative acts and 

practices are sufficient to justify 

dispensing with the requisite 

surveillance-sharing agreement. The 

listing exchange has not met that 

requirement here. Therefore, the 

Commission is unable to find that the 

proposed rule change is consistent with 

the statutory standard. 

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

Exchange Act, the Commission must 

disapprove a proposed rule change filed 

by a national securities exchange if it 

does not find that the proposed rule 

change is consistent with the applicable 

requirements of the Exchange Act— 

including the requirement under 

Section 6(b)(5) that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices.154

For the reasons discussed above, BZX 

has not met its burden of demonstrating 

that the proposal is consistent with 

Exchange Act Section 6(b)(5),155 and, 

accordingly, the Commission must 

disapprove the proposal.156

D. Other Comments 

One comment letter also addresses the 

general nature and uses of bitcoin.157

Ultimately, however, additional 

discussion of these topics is 

unnecessary, as they do not bear on the 

basis for the Commission’s decision to 

disapprove the proposal. 

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

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

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with Section 6(b)(5) of the 

Exchange Act. 

It is therefore ordered, pursuant to 

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

that proposed rule change SR– 

CboeBZX–2021–052 be, and hereby is, 

disapproved. 

By the Commission. 

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2022–05500 Filed 3–15–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94394; File No. SR–MEMX– 

2022–01] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule 

March 10, 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 February 

28, 2022, 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 

March 1, 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) Adopt a new NBBO Setter Tier that 

provides an additive 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’’) and that establish the national 

best bid or offer (‘‘NBBO’’); (ii) modify 

the Exchange’s pricing for executions of 

orders in securities priced at or above 

$1.00 per share that add non-displayed 

liquidity to the Exchange (such orders, 

‘‘Added Non-Displayed Volume’’) by 

reducing the standard rebates for such 

executions and adopting tiered pricing 

under new Non-Display Add Tiers that 

provide enhanced rebates for such 

executions; (iii) modify the required 

criteria under Liquidity Provision Tier 

3; (iv) reduce the standard rebate for 

executions of Added Displayed Volume; 

(v) reduce the standard rebate for 

executions of Retail Orders 4 in 


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Rule 5320.03 that originates from a natural person 

and is submitted to the Exchange by a Retail 

Member Organization (‘‘RMO’’), 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). 

5Market share percentage calculated as of 

February 25, 2022. The Exchange receives and 

processes data made available through consolidated 

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

6 Id. 

7An order that is entered at the most aggressive 

price both on the Exchange’s order book and 

according to the then-current consolidated data 

from the applicable securities information processor 

and direct data feeds used by the Exchange will be 

determined to have established the NBBO for 

purposes of the NBBO Setter Tier without regard to 

whether a more aggressive order is entered prior to 

the original order being executed. 

8As 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. 9The Exchange notes that all orders (other than 

Retail Orders, which are assigned a Fee Code of 

‘‘Br’’) in securities priced below, at or above $1.00 

per share that add displayed liquidity to the 

Exchange and that establish the NBBO are assigned 

a Fee Code of ‘‘B’’ on the execution reports 

provided by the Exchange. The Exchange further 

notes that the Fee Code assigned to any such order 

to indicate that such order also qualifies for a 

pricing tier/incentive (e.g., ‘‘B1’’, ‘‘B2’’, ‘‘B3’’, 

‘‘Bq1’’ and ‘‘Bq2’’) is not provided on the execution 

reports but instead is provided on the monthly 

invoices after a determination of tier/incentive 

qualification for a particular month has been made; 

thus, any such order that also qualifies for a pricing 

tier/incentive would still be assigned a Fee Code of 

‘‘B’’ (rather than the applicable tier/incentive Fee 

Code) on the execution reports and would therefore 

be counted in determining whether a Member 

qualifies for the NBBO Setter Tier. 

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. 

11The proposed pricing for the NBBO Setter Tier 

is referred to by the Exchange on the Fee Schedule 

under the new description ‘‘NBBO Setter Tier’’ with 

a Fee Code of ‘‘S’’ to be appended to the otherwise 

applicable Fee Code assigned by the Exchange on 

the monthly invoices for qualifying executions 

(including Fee Codes ‘‘B’’, ‘‘B1’’, ‘‘B2’’, ‘‘B3’’, ‘‘Bq1’’ 

and ‘‘Bq2’’). 

12See, e.g., Securities Exchange Act Release No. 

73813 (December 11, 2014), 79 FR 75197 (December 

17, 2014) (SR–BATS–2014–063) (notice of filing 

and immediate effectiveness of fee changes adopted 

by BATS, including the adoption of ‘‘NBBO Setter 

Tiers’’ that provide additive rebates for executions 

of orders that establish the NBBO to Members that 

qualify for such tiers by achieving a specified 

ADAV threshold with respect to orders that add 

displayed liquidity and that establish the NBBO). 

13Pegged Orders are described in Exchange Rules 

11.6(h) and 11.8(c) and generally defined as an 

order that is pegged to a reference price and 

automatically re-prices in response to changes in 

the NBBO. 

14A Midpoint Peg instruction is an instruction 

that may be placed on a Pegged Order that instructs 

the Exchange to peg the order to midpoint of the 

NBBO. See Exchange Rule 11.6(h)(2). 

securities priced at or above $1.00 per 

share that add displayed liquidity to the 

Exchange (such orders, ‘‘Added 

Displayed Retail Volume’’); (vi) increase 

the standard 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’’); (vii) modify Liquidity 

Removal Tier 1 by increasing the fee for 

executions of Removed Volume and 

modifying the required criteria under 

such tier; (viii) eliminate the DLI 

Additive Rebate for DLI Tier 2; and (ix) 

eliminate the Targeted Step-Up Tier. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues, 

to which market participants may direct 

their order flow. Based on publicly 

available information, no single 

registered equities exchange currently 

has more than approximately 16.5% of 

the total market share of executed 

volume of equities trading.5 Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow, 

and the Exchange currently represents 

approximately 4% of the overall market 

share.6 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. 

Adoption of NBBO Setter Tier 

The Exchange proposes to adopt a 

new volume-based tier, referred to by 

the Exchange as the NBBO Setter Tier, 

in which the Exchange will provide an 

additive rebate for executions of Added 

Displayed Volume (other than Retail 

Orders) that establish the NBBO (such 

orders, ‘‘Setter Volume’’).7 Under the 

proposed NBBO Setter Tier, the 

Exchange will provide an additive 

rebate of $0.0003 per share for 

executions of Setter Volume for a 

Member that qualifies for the NBBO 

Setter Tier by achieving an ADAV 8 with 

respect to orders with Fee Code ‘‘B’’ (as 

assigned on the execution reports 

provided by the Exchange 9) that is 

equal to or greater than 0.10% of the 

TCV.10 The $0.0003 per share additive 

rebate will be provided in addition to 

the rebate that is otherwise applicable to 

each of a qualifying Members’ orders 

that constitutes Setter Volume 

(including a rebate provided under 

another pricing tier/incentive).11 The 

Exchange notes that the additive rebate 

will not apply to executions of orders in 

securities priced below $1.00 per share. 

The proposed NBBO Setter Tier is 

designed to attract aggressively priced 

displayed liquidity to the Exchange by 

providing an additional rebate for 

executions of Setter Volume to Members 

that contribute to establishing the NBBO 

on the Exchange by achieving the Fee 

Code ‘‘B’’ volume threshold described 

above, thereby promoting price 

discovery and market quality on the 

Exchange. The Exchange notes that the 

proposed NBBO Setter Tier is 

comparable to other volume-based 

incentives and discounts, which have 

been widely adopted by exchanges 

(including the Exchange), including 

similar pricing incentives applicable to 

executions of orders that establish the 

NBBO.12

Modify Pricing for Added NonDisplayed Volume 

The Exchange proposes to modify its 

pricing for executions of Added NonDisplayed Volume by reducing the 

standard rebates for such executions 

and adopting tiered pricing under new 

Non-Display Add Tiers that provide 

enhanced rebates for such executions. 

Added Non-Displayed Volume includes 

both: (i) Pegged Orders 13 with a 

Midpoint Peg 14 instruction (such 

orders, ‘‘Midpoint Peg orders’’) in 

securities priced at or above $1.00 per 

share that add liquidity to the Exchange 

(such orders, ‘‘Added Midpoint 

Volume’’) and (ii) orders that are not 

Midpoint Peg orders in securities priced 

at or above $1.00 per share that add 

non-displayed liquidity to the Exchange 

(such orders, ‘‘Added Non-Midpoint 

Hidden Volume’’). 

Currently, the Exchange provides 

standard rebates of $0.0025 per share 

and $0.0020 per share for executions of 

Added Midpoint Volume and Added 

Non-Midpoint Hidden Volume, 

respectively. The Exchange now 

proposes to reduce each of these 


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15The proposed standard pricing for executions 

of Added Midpoint Volume is referred to by the 

Exchange on the Fee Schedule under the existing 

description ‘‘Added non-displayed volume, 

Midpoint Peg’’ and such orders will continue to 

receive a Fee Code of ‘‘M’’ on execution reports. 

The proposed standard pricing for executions of 

Added Non-Midpoint Hidden Volume is referred to 

by the Exchange on the Fee Schedule under the 

existing description ‘‘Added non-displayed 

volume’’ and such orders will continue to receive 

a Fee Code of ‘‘H’’ on execution reports. 

16See, e.g., the Nasdaq Price List—Trading 

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

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

standard rebate of $0.0014 per share for executions 

of orders in Tape A and Tape B securities priced 

at or above $1.00 per share that add non-displayed 

midpoint liquidity and a standard rebate of $0.0010 

per share for executions of orders in Tape C 

securities priced at or above $1.00 per share that 

add non-displayed midpoint liquidity. 

17See, e.g., 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 $0.0010 per share for 

executions of orders in securities priced at or above 

$1.00 per share that add non-displayed liquidity. 

18As proposed, the term ‘‘Non-Displayed ADAV’’ 

means ADAV with respect to non-displayed orders 

(including Midpoint Peg orders). The Exchange 

proposes to add this definition of Non-Displayed 

ADAV under the ‘‘Definitions’’ section of the Fee 

Schedule. 19The proposed pricing for Non-Display Add Tier 

1 is referred to by the Exchange on the Fee 

Schedule under the new description ‘‘Added nondisplayed volume, Non-Display Add Tier 1’’ with 

a Fee Code of ‘‘H1’’ for qualifying Added NonMidpoint Hidden Volume and a Fee Code of ‘‘M1’’ 

for qualifying Added Midpoint Volume assigned on 

the monthly invoices provided by the Exchange. 

The Exchange notes that because the determination 

of whether a Member qualifies for Non-Display Add 

Tier 1 for a particular month will not be made until 

after the month-end, the Exchange will provide the 

Fee Code otherwise applicable to such transactions 

(i.e., ‘‘H’’ or ‘‘M’’, as applicable) on the execution 

reports provided to Members during the month, and 

it will only designate the Fee Code applicable to the 

achieved pricing tier on the monthly invoices, 

which are provided after such determination has 

been made. The Exchange also notes that this is 

how it applies Fee Codes for its tier-based pricing 

today and how it will apply Fee Codes for any other 

tier-based pricing described herein. 

20The proposed pricing for Non-Display Add Tier 

2 is referred to by the Exchange on the Fee 

Schedule under the new description ‘‘Added nondisplayed volume, Non-Display Add Tier 2’’ with 

a Fee Code of ‘‘H2’’ for qualifying Added NonMidpoint Hidden Volume and a Fee Code of ‘‘M2’’ 

for qualifying Added Midpoint Volume assigned on 

the monthly invoices provided by the Exchange. 

21For example, Cboe BZX currently offers ‘‘NonDisplay Add Volume Tiers’’ in which Cboe BZX 

provides enhanced rebates for executions of orders 

in securities priced at or above $1.00 per share that 

add non-displayed liquidity for members that 

qualify for such tiers by achieving certain specified 

volume thresholds. See the Cboe BZX equities 

trading fee schedule on its public website (available 

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

fee_schedule/bzx/). 

22As proposed, the term ‘‘Step-Up Displayed 

ADAV’’ means Displayed ADAV in the relevant 

baseline month subtracted from current Displayed 

ADAV. As proposed, the term ‘‘Displayed ADAV’’ 

means ADAV with respect to displayed orders. The 

Exchange proposes to add these definitions of StepUp Displayed ADAV and Displayed ADAV under 

the ‘‘Definitions’’ section of the Fee Schedule. 

23As proposed, the term ‘‘Midpoint ADAV’’ 

means ADAV with respect to Midpoint Peg orders. 

The Exchange proposes to add this definition of 

Midpoint ADAV under the ‘‘Definitions’’ section of 

the Fee Schedule. 

standard rebates to $0.0018 per share.15

The purpose of reducing the standard 

rebates for executions of Added 

Midpoint Volume and Add NonMidpoint Hidden Volume is for 

business and competitive reasons, as the 

Exchange believes reducing such rebates 

as proposed 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 the proposed 

standard rebate for executions of Added 

Midpoint Volume remains higher than, 

and competitive with, the standard 

rebates provided by at least one other 

exchange for executions of similar 

orders.16 The Exchange also notes that 

the proposed standard rebate for 

executions of Added Non-Midpoint 

Hidden Volume remains higher than, 

and competitive with, the standard 

rebates provided by at least one other 

exchange for executions of similar 

orders.17

In connection with the proposed 

reduction of the standard rebates for 

executions of Added Non-Displayed 

Volume (i.e., both Added Midpoint 

Volume and Added Non-Midpoint 

Hidden Volume) described above, the 

Exchange is proposing to adopt new 

volume-based tiers applicable to such 

executions, referred to by the Exchange 

as Non-Display Add Tiers 1 and 2, in 

which the Exchange would provide 

enhanced rebates for executions of 

Added Non-Displayed Volume for 

Members that achieve the associated 

volume thresholds. Specifically, under 

proposed Non-Display Add Tier 1, the 

Exchange would provide a rebate of 

$0.0028 per share for executions of 

Added Non-Displayed Volume for 

Members that qualify for such tier by 

achieving a Non-Displayed ADAV 18

that is equal to or greater than 5,000,000 

shares.19 Additionally, under proposed 

Non-Display Add Tier 2, the Exchange 

would provide a rebate of $0.0024 per 

share for executions of Added NonDisplayed Volume for Members that 

qualify for such tier by achieving a NonDisplayed ADAV that is equal to or 

greater than 1,000,000 shares (but less 

than 5,000,000 shares).20 The Exchange 

proposes to provide Members that 

qualify for Non-Display Add Tier 1 or 

Non-Display Add Tier 2 free executions 

of orders (including Midpoint Peg 

orders) in securities priced below $1.00 

per share that add non-displayed 

liquidity to the Exchange, which is the 

same as the standard pricing that is 

currently applicable to such executions 

for all Members. 

The Exchange believes that the 

proposed Non-Display Add Tiers 

provide an incremental incentive for 

Members to maintain or strive for higher 

Non-Displayed ADAV on the Exchange 

in order to qualify for the enhanced 

rebates for executions of Added NonDisplayed Volume, and as such, are 

designed to encourage Members to 

maintain or increase their order flow 

(particularly in the form of liquidity 

adding non-displayed orders) to the 

Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants. The 

Exchange notes that the proposed NonDisplay Add Tiers are comparable to 

other volume-based incentives and 

discounts, which have been widely 

adopted by exchanges (including the 

Exchange), including pricing tiers that 

provide enhanced rebates for executions 

of Added Non-Displayed Volume.21

Modify Criteria Under Liquidity 

Provision Tier 3 

The Exchange currently offers three 

Liquidity Provision Tiers in which the 

Exchange provides enhanced rebates for 

executions of Added Displayed Volume 

based on a Member achieving the 

corresponding volume-based threshold 

(i.e., the required criteria) for a 

particular tier. Currently, a Member 

qualifies for Liquidity Provision Tier 3, 

and thus receives an enhanced rebate of 

$0.0027 per share for executions of 

Added Displayed Volume under such 

tier, by achieving an ADAV that is equal 

to or greater than 0.05% of the TCV. 

Now, the Exchange proposes to modify 

the required criteria under Liquidity 

Provision Tier 3 such that a Member 

would now qualify for such tier by 

achieving any of the three following 

volume-based thresholds: (1) An ADAV 

that is equal to or greater than 0.05% of 

the TCV; (2) a Step-Up Displayed 

ADAV 22 from February 2022 that is 

equal to or greater than 0.02% of the 

TCV; or (3) a Midpoint ADAV 23 that is 

equal to or greater than 1,000,000 

shares. Thus, such proposed changes 

would keep the existing ADAV 

threshold intact and also provide two 

alternative volume thresholds that a 

Member may choose to achieve in order 

to qualify for Liquidity Provision Tier 3, 

including one threshold based on a 

Member increasing its Displayed ADAV 

above its Displayed ADAV in February 

2022, which is designed to encourage 

Members to increase their orders that 

add displayed liquidity to the Exchange, 


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24The proposed standard rebate 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, on execution 

reports. 

25See, 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 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 

$0.0016 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 (‘‘Nasdaq’’) 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. 

26The proposed standard rebate for executions of 

Added Displayed Retail Volume is referred to by 

the Exchange on the Fee Schedule under the 

existing description ‘‘Added displayed volume, 

Retail Order’’ with a Fee Code of ‘‘Br’’, ‘‘Dr’’ or ‘‘Jr’’, 

as applicable, on execution reports. 27See, 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 rebate of 

$0.0032 per share for executions of attested retail 

orders in securities priced at or above $1.00 per 

share that add displayed liquidity; the Cboe EDGX 

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

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

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

schedule/edgx/), which reflects a standard rebate of 

$0.0032 per share for executions of attested retail 

orders in securities priced at or above $1.00 per 

share that add displayed liquidity. 

28The proposed standard fee for executions of 

Removed Volume is referred to by the Exchange on 

the Fee Schedule under the existing description 

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

Code of ‘‘R’’ on execution reports. 

29See, e.g., the Cboe EDGX equities trading fee 

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

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

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

$0.0030 per share for executions of orders in 

securities priced at or above $1.00 per share that 

remove liquidity; the Nasdaq Price List—Trading 

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

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

standard fee of $0.0030 per share for executions of 

orders in securities priced at or above $1.00 per 

share that remove liquidity. 

30The proposed pricing for Liquidity Removal 

Tier 1 is referred to by the Exchange on the Fee 

and one threshold based on a Member 

maintaining or increasing its Midpoint 

ADAV above the specified amount, 

which is designed to encourage 

Members to maintain or increase their 

Midpoint Peg orders that add liquidity 

to the Exchange. The Exchange is not 

proposing to modify the pricing 

associated with Liquidity Provision Tier 

3. 

The Exchange believes that Liquidity 

Provision Tier 3, as modified, would 

encourage the submission of more 

diverse types of order flow to the 

Exchange, as it provides two additional 

alternative thresholds based on different 

types of volume that Members may 

choose to achieve, thereby contributing 

to a more robust and well-balanced 

market ecosystem on the Exchange to 

the benefit of all Members. The 

Exchange notes that Liquidity Provision 

Tier 3, as modified, would continue to 

be available to all Members and, while 

the Exchange has no way of predicting 

with certainty how the proposed new 

criteria will impact Member activity, the 

Exchange expects that more Members 

will qualify for such tier than currently 

do under the proposed new criteria, as 

it is more expansive and provides two 

additional alternative thresholds that 

Members may choose to achieve. 

Reduce Standard Rebate for Added 

Displayed Volume 

Currently, the Exchange provides a 

standard rebate of $0.0022 per share for 

executions of Added Displayed Volume. 

The Exchange now proposes to reduce 

the standard rebate for executions of 

Added Displayed Volume to $0.0020 

per share.24 The purpose of reducing the 

standard rebate for executions of Added 

Displayed Volume is for business and 

competitive reasons, as the Exchange 

believes that reducing such rebate as 

proposed 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 remains in 

line with, or higher than, 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.25

Reduce Standard Rebate for Added 

Displayed Retail Volume 

Currently, the Exchange provides a 

standard rebate of $0.0037 per share for 

executions of Added Displayed Retail 

Volume. The Exchange now proposes to 

reduce the standard rebate for 

executions of Added Displayed Retail 

Volume to $0.0035 per share.26 The 

purpose of reducing the standard rebate 

for executions of Added Displayed 

Retail Volume is for business and 

competitive reasons, as the Exchange 

believes that reducing such rebate as 

proposed 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 Retail Volume 

remains higher than, and competitive 

with, the standard rebates provided by 

other exchanges for executions of 

attested retail orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.27

Increase Standard Fee for Removed 

Volume 

Currently, the Exchange charges a 

standard fee of $0.0029 per share for 

executions of Removed Volume. The 

Exchange now proposes to increase the 

standard fee for executions of Removed 

Volume to $0.0030 per share.28 The 

purpose of increasing the standard fee 

for executions of Removed Volume is 

for business and competitive reasons, as 

the Exchange believes that increasing 

such fee as proposed would generate 

additional revenue to offset some of the 

costs associated with the Exchange’s 

current pricing structure, which 

provides various rebates for liquidityadding 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 Volume 

remains in line with the standard fees 

charged by other exchanges for 

executions of orders in securities priced 

at or above $1.00 per share that remove 

liquidity.29

Modify Liquidity Removal Tier 1 

The Exchange currently offers 

Liquidity Removal Tier 1 in which 

qualifying Members are charged a 

discounted fee of $0.0028 per share for 

executions of Removed Volume 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. Now, the 

Exchange proposes to modify Liquidity 

Removal Tier 1 by increasing the fee for 

executions of Removed Volume and 

modifying the required criteria under 

such tier. Specifically, the Exchange 

proposes to charge a fee of $0.00285 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 0.30% 

of the TCV; or (2) an ADV of at least 

0.60% of the TCV.30


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 14927 

Schedule under the existing description ‘‘Removed 

volume from MEMX Book, Liquidity Removal Tier 

1’’ with a Fee Code of ‘‘R1’’ assigned on the 

monthly invoices provided by the Exchange. The 

Exchange is not proposing to change the fee charged 

under Liquidity Removal Tier 1 for executions of 

securities priced below $1.00 per share. 

31As set forth on the Fee Schedule, ‘‘Step-Up 

ADAV’’ means ADAV in the relevant baseline 

month subtracted from current ADAV. 

32As set forth on the Fee Schedule, ‘‘Targeted 

Step-Up Securities’’ means a list of securities 

designated as such, the universe of which will be 

determined by the Exchange and published on the 

Exchange’s website. 

33See 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). 

34 15 U.S.C. 78f. 

35 15 U.S.C. 78f(b)(4) and (5). 

The Exchange believes that the 

proposed fee for executions of Removed 

Volume under Liquidity Removal Tier 1 

represents only a modest increase from 

the current fee charged for such 

executions under such tier. The purpose 

of increasing such fee as proposed 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 lower both the 

ADAV threshold and the ADV threshold 

such that each threshold would be 

easier for Members to achieve and, in 

turn, while the Exchange has no way of 

predicting with certainty how the 

proposed new criteria will impact 

Member activity, the Exchange expects 

that more Members will strive to qualify 

for such tier than currently do, resulting 

in the submission of additional order 

flow to the Exchange. The Exchange 

also notes that Liquidity Removal Tier 

1, as modified, would continue to be 

available to all Members. 

Eliminate DLI Additive Rebate for DLI 

Tier 2 

The Exchange proposes to eliminate 

the DLI Additive Rebate for DLI Tier 2. 

Currently, the Exchange offers DLI Tiers 

1 and 2 in which qualifying Members 

are provided a corresponding enhanced 

rebate for executions of Added 

Displayed Volume by quoting at the 

NBBO for a significant portion of each 

day in a specified number of securities, 

including a specified number of DLI 

Target Securities, with DLI Tier 1 

providing a higher rebate than DLI Tier 

2 commensurate with NBBO quoting 

requirements in a larger number of 

securities. Additionally, the Exchange 

currently offers a DLI Additive Rebate 

incentive that is applicable to DLI Tiers 

1 and 2, which provides an additive 

rebate of $0.0001 per share for 

executions of Added Displayed Volume 

where: (1) For a Member that qualifies 

for DLI Tier 1, such Member has an 

ADAV that is equal to or greater than 

0.30% of the TCV; and (2) for a Member 

that qualifies for DLI Tier 2, such 

Member has an ADAV that is equal to 

or greater than 0.10% of the TCV. The 

Exchange now proposes to eliminate the 

DLI Additive Rebate for DLI Tier 2, but 

keep the DLI Additive Rebate for DLI 

Tier 1. The reason for eliminating the 

DLI Additive Rebate for DLI Tier 2 is 

that the incentive is not achieving the 

level of participation that the Exchange 

expected, and thus, is not 

accomplishing the goal that the 

Exchange had when initially adopting 

this incentive. Due to the lower-thanexpected level of participation, the 

Exchange does not believe the proposed 

elimination of Targeted Step-Up Tier 

[sic] will have a significant impact on 

any Member’s trading behavior on the 

Exchange. The Exchange therefore no 

longer wishes to, nor is it required to, 

maintain such tier. More specifically, 

the proposed change removes such 

incentive, as the Exchange would rather 

redirect future resources and funding 

into other incentives and tiers intended 

to incentivize increased order flow. The 

Exchange notes that several Members 

currently qualify for the DLI Additive 

Rebate for DLI Tier 1, which is why the 

Exchange is not proposing to eliminate 

that incentive since it has achieved the 

expected level of participation. 

Eliminate Targeted Step-Up Tier 

Finally, the Exchange proposes to 

eliminate the Targeted Step-Up Tier. 

The Exchange currently offers the 

Targeted Step-Up Tier in which it 

provides an additive rebate of $0.0002 

per share to executions of orders (other 

than displayed Retail Orders) in 

securities priced at or above $1.00 per 

share that add liquidity to the Exchange 

(such orders, ‘‘Added Volume’’) for 

Members that qualify for such tier by 

achieving: (1) A Step-Up ADAV 31 from 

October 2021 that is equal to or greater 

than 0.05% of the TCV in the Targeted 

Step-Up Securities; 32 or (2) an ADAV 

that is equal to or greater than 0.08% of 

the TCV in the Targeted Step-Up 

Securities. The Exchange adopted the 

Targeted Step-Up Tier in November 

2021 for the purpose of encouraging 

Members to increase their volume on 

the Exchange in the Targeted Step-Up 

Securities, thereby improving its market 

quality with respect to such securities 

and contributing to a more robust and 

well-balanced market ecosystem on the 

Exchange to the benefit of all 

Members.33 The Exchange now 

proposes to eliminate the Targeted StepUp Tier, as the incentive is not 

achieving the level of participation that 

the Exchange expected, and thus, is not 

accomplishing the goal that the 

Exchange had when initially adopting 

this incentive. Due to the lower-thanexpected level of participation, the 

Exchange does not believe the proposed 

elimination of Targeted Step-Up Tier 

will have a significant impact on any 

Member’s trading behavior on the 

Exchange. The Exchange therefore no 

longer wishes to, nor is it required to, 

maintain such tier. More specifically, 

the proposed rule change removes such 

tier, as the Exchange would rather 

redirect future resources and funding 

into other programs and tiers intended 

to incentivize increased order flow. 

In connection with the elimination of 

the Targeted Step-Up Tier, the Exchange 

also proposes to delete the definition of 

the term ‘‘Targeted Step-Up Securities’’ 

from the ‘‘Definitions’’ section of the 

Fee Schedule, as such term would no 

longer be used on the Fee Schedule. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,34

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

6(b)(5) of the Act,35 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. 

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 


jspears on DSK121TN23PROD with NOTICES1
14928 Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 

36Securities Exchange Act Release No. 51808 

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

37See supra note 12. 

38See supra notes 16–17. 

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.’’ 36

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 aggressively priced 

liquidity and more diverse types of 

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. 

The Exchange believes that the 

proposed NBBO Setter Tier is a 

reasonable means to encourage 

Members to not only increase their 

order flow to the Exchange but also to 

contribute to price discovery and market 

quality on the Exchange by submitting 

aggressively priced displayed liquidity. 

As noted above, the proposed NBBO 

Setter Tier is comparable to other 

volume-based incentives and discounts, 

which have been widely adopted by 

exchanges (including the Exchange) and 

are 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 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 the proposed NBBO 

Setter Tier is equitable and not unfairly 

discriminatory for these same reasons, 

as it is available to all Members and is 

designed to incentivize the entry of 

aggressively priced displayed liquidity 

that will create tighter spreads, thereby 

promoting price discovery and market 

quality on the Exchange to the benefit 

of all Members and public investors. As 

such, the Exchange believes the additive 

rebate for executions of Setter Volume 

provided under the NBBO Setter Tier 

for qualifying Members is reasonably 

related to the market quality benefits 

that such tier is designed to promote. 

Additionally, as noted above, at least 

one other U.S. equity exchange has 

adopted a similar pricing incentive 

applicable to executions of orders that 

establish the NBBO.37

The Exchange believes that the 

proposed changes to reduce the 

standard rebates provided for 

executions of Added Non-Displayed 

Volume (i.e., both Added Midpoint 

Volume and Added Non-Midpoint 

Hidden Volume) are reasonable because, 

as described above, such changes 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 the proposed new standard rebates 

for executions of Added Midpoint 

Volume and Added Non-Midpoint 

Hidden Volume remain higher than, and 

competitive with, the standard rebates 

provided by other exchanges for 

executions of similar orders.38 The 

Exchange also believes the proposed 

standard rebates for executions of 

Added Midpoint Volume and Added 

Non-Midpoint Hidden Volume are 

equitable and not unfairly 

discriminatory, as such standard rebates 

will apply equally to all Members. 

The Exchange believes that the 

proposed Non-Display Add Tiers 1 and 

2 are reasonable because such tiers 

would provide Members with an 

additional incentive to achieve certain 

volume thresholds on the Exchange and, 

in return, receive enhanced rebates for 

Added Non-Displayed Volume 

commensurate with the benefits of 

increased activity. The Exchange also 

believes that the proposed Non-Display 

Add Tiers 1 and 2 are reasonable, 

equitable, and not unfairly 

discriminatory for the same reasons 

applicable to other volume-based 

incentives and discounts described 

above, in that such tiers would be 

available to all Members and are 

designed to encourage Members to 

maintain or increase their order flow 

(particularly in the form of liquidity 

adding non-displayed orders) to the 

Exchange, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants. 

Further, the proposed new Non-Display 

Add Tiers 1 and 2 are reasonable as 

such tiers would provide Members with 

opportunities to qualify for enhanced 

rebates for executions of Added NonDisplayed Volume in a manner that 

provides increasingly higher benefits for 

satisfying increasingly more stringent 

criteria. 

The Exchange also believes it is 

reasonable, equitable and not unfairly 

discriminatory to provide Members that 

qualify for Non-Display Add Tier 1 or 

Non-Display Add Tier 2 free executions 

of orders (including Midpoint Peg 

orders) in securities priced below $1.00 

per share that add non-displayed 

liquidity to the Exchange, as this is the 

same as the standard pricing that is 

currently applicable to such executions 

for all Members. 

The Exchange believes that the 

proposed change to modify the required 

criteria under Liquidity Provision Tier 3 

is reasonable because, as noted above, 

such change would keep the existing 

ADAV threshold intact and also provide 

two additional alternative volume 

thresholds that a Member may choose to 

achieve that are based on different types 

of volume, which would incentivize the 

submission of different types of order 

flow, thereby contributing to a more 

robust and well-balanced market 

ecosystem on the Exchange to the 

benefit of all Members. The Exchange 

also believes the proposed new criteria 

are equitable and not unfairly 

discriminatory because all Members 

will continue to be eligible to meet such 

criteria, including the Members that 

currently meet the existing ADAV 

threshold that is not changing. Further, 

as noted above, while the Exchange has 

no way of predicting with certainty how 

the proposed new criteria will impact 

Member activity, the Exchange expects 

that more Members will be able to 

qualify for such tier under the proposed 

new criteria, which is more expansive. 

The Exchange believes that the 

proposed reduced standard rebate 

provided for executions of Added 

Displayed Volume (i.e., $0.0020 per 

share) is reasonable because the 

Exchange believes it represents only a 

modest decrease (i.e., $0.0002 per share) 

from the current standard rebate 

provided for executions of Added 

Displayed Volume (i.e., $0.0022 per 

share) and, as noted above, it remains in 

line with, or higher than, the standard 

rebates provided by other exchanges for 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 14929 

39See supra note 25. 

40See supra note 27. 

41See supra note 29. 

42 15 U.S.C. 78f(b)(4) and (5). 

43See supra note 25. 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.39

Similarly, Exchange believes that the 

proposed reduced standard rebate 

provided for executions of Added 

Displayed Retail Volume (i.e., $0.0035 

per share) is reasonable because the 

Exchange believes it represents only a 

modest decrease (i.e., $0.0002 per share) 

from the current standard rebate 

provided for executions of Added 

Displayed Retail Volume (i.e., $0.0037 

per share) and, as noted above, it 

remains higher than, and competitive 

with, the standard rebates provided by 

other exchanges for executions of 

attested retail orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.40

The Exchange also believes that the 

proposed increased standard fee 

charged for executions of Removed 

Volume (i.e., $0.0030 per share) is 

reasonable because the Exchange 

believes it represents only a modest 

increase (i.e., $0.0001 per share) from 

the current standard fee charged for 

executions of Removed Volume (i.e., 

$0.0029 per share) and, as noted above, 

it remains in line with the standard fees 

charged by other exchanges for 

executions of orders in securities priced 

at or above $1.00 per share that remove 

liquidity.41

The Exchange believes the proposed 

changes to reduce the standard rebate 

for executions of Added Displayed 

Volume, reduce the standard rebate for 

executions of Added Displayed Retail 

Volume, and increase the standard fee 

for executions of Removed Volume are 

reasonable because, as noted above, the 

Exchange believes such changes would 

act together 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. 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. 

The Exchange believes that the 

proposed increased fee charged for 

executions of Removed Volume under 

Liquidity Removal Tier 1 (i.e., $0.00285 

per share) is reasonable because the 

Exchange believes it represents only a 

modest increase (i.e., $0.00005 per 

share) from the current fee charged for 

executions of Removed Volume under 

Liquidity Removal Tier 1 (i.e., $0.0028 

per share), and the Exchange is also 

proposing to lower both of the volume 

thresholds under such tier such that 

each threshold would be easier to 

achieve. Thus, while the Exchange is 

modestly increasing the fee under such 

tier, as noted above, it expects that more 

Members will strive to qualify for such 

tier due to the proposed lower criteria 

and, in turn, receive the corresponding 

discounted fee for executions of 

Removed Volume. The Exchange also 

believes this proposed change is 

reasonable, as it believes the proposed 

increased fee continues to be 

commensurate with the proposed lower 

criteria. The Exchange also believes the 

proposed increased fee and new criteria 

are equitable and not unfairly 

discriminatory because all Members 

will continue to be eligible to meet such 

criteria and qualify for Liquidity 

Removal Tier 1, and therefore, have the 

opportunity to pay a discounted fee for 

executions of Removed Volume. 

The Exchange believes the proposed 

rule changes to eliminate the DLI 

Additive Rebate for DLI Tier 2 and the 

Targeted Step-Up Tier are reasonable 

because the Exchange is not required to 

maintain such incentives or provide 

Members any opportunities to receive 

additive rebates. The Exchange believes 

the proposal to eliminate such 

incentives is also equitable and not 

unfairly discriminatory because it 

applies equally to all Members (i.e., the 

incentives will not be available for any 

Member). As noted above, neither of 

these incentives has achieved the level 

of participation the Exchange expected, 

and thus, such incentives are not 

accomplishing the goals that the 

Exchange had when initially adopting 

them. As the additional rebates offered 

under these incentives are not affecting 

Members’ behavior in the manner 

originally conceived by the Exchange in 

that there are lower-than-expected 

levels of participation, the Exchange 

does not believe the proposed 

elimination of such incentives will have 

a significant impact on any Member’s 

trading behavior on the Exchange. 

Furthermore, the proposed rule change 

to eliminate both the DLI Additive 

Rebate for DLI Tier 2 and the Targeted 

Step-Up Tier enables the Exchange to 

redirect resources and funding into 

other pricing incentives and tiers 

intended to incentivize increased order 

flow and enhance market quality for all 

Members. 

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 42 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, as well as to incentivize market 

participants to direct additional 

aggressively priced liquidity and more 

diverse types of order flow to the 

Exchange, thereby deepening liquidity 

and promoting market quality on the 

Exchange to the benefit of all 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.’’ 43

Intramarket Competition 

As discussed above, the Exchange 

believes that the proposal would 

incentivize Members to submit 

additional aggressively priced displayed 

liquidity (including liquidity that 

establishes the NBBO) to the Exchange, 

and to maintain or increase their order 

flow on the Exchange generally, thereby 

contributing to a deeper and more liquid 

market and promoting price discovery 

and market quality on the Exchange 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 


jspears on DSK121TN23PROD with NOTICES1
14930 Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 

44See supra notes 12, 16, 17, 21, 25, 27 and 29. 

45See supra note 36. 

46NetCoalition 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)). 

47 15 U.S.C. 78s(b)(3)(A)(ii). 

48 17 CFR 240.19b–4(f)(2). 

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 proposed new NBBO 

Setter Tier and Non-Display Add 

Volume Tiers, and thus receive the 

proposed additive rebate for executions 

of Setter Volume or the proposed 

enhanced rebates for executions of 

Added Non-Displayed Volume, 

respectively, would be available to all 

Members that meet the associated 

volume requirements in any month. 

Similarly, as described above, Liquidity 

Provision Tier 3 and Liquidity Removal 

Tier 1 continue to be available to all 

Members that meet the associated 

volume criteria and, as noted above, the 

proposed new volume criteria under 

Liquidity Provision Tier 3 and Liquidity 

Removal Tier 1 include more expansive 

or lower volume thresholds, 

respectively, which the Exchange 

believes would enable more Members to 

possibly qualify for such tiers without 

impacting the ability of Members that 

currently qualify to continue to do so, 

and the Exchange believes the 

respective enhanced rebate and 

discounted fee provided under such 

tiers are reasonably related to the 

enhanced market quality that such tiers 

are designed to promote. Additionally, 

as noted above, the proposed reduced 

standard rebates for executions of 

Added Displayed Volume and Added 

Displayed Retail Volume, as well as the 

proposed increased standard fees for 

executions of Added Midpoint Volume, 

Add Non-Midpoint Hidden Volume and 

Removed Volume, would continue to 

apply equally to all Members in the 

same manner that such standard rates 

currently do today. Lastly, the Exchange 

does not believe the proposed changes 

to eliminate the DLI Additive Rebate for 

DLI Tier 2 and the Targeted Step-Up 

Tier will impose any burden on 

intramarket competition because such 

changes will apply to all Members 

uniformly, as in, such incentives will no 

longer be available to any Member, and, 

as described above, the Exchange does 

not believe the proposed elimination of 

such incentives will have a significant 

impact on any Member’s trading 

behavior on the Exchange. For the 

foregoing reasons, the Exchange believes 

the proposed changes would not impose 

any burden on intramarket competition 

that is not necessary or appropriate in 

furtherance of the purposes of the Act. 

Intermarket Competition 

As 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 

16.5% 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, including with respect 

to executions of Added Displayed 

Volume, Added Displayed Retail 

Volume, Added Midpoint Volume, 

Added Non-Midpoint Hidden Volume, 

Removed Volume, and Setter 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 is comparable to, and/or 

competitive with, pricing for similar 

executions in place at other 

exchanges.44 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, Added 

Displayed Retail Volume, Added 

Midpoint Volume, Added NonMidpoint Hidden Volume, and 

Removed Volume, as well as 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.’’ 45 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’. . . .’’.46 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 47 and Rule 

19b–4(f)(2) 48 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 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 14931 

49 17 CFR 200.30–3(a)(12). 

1Exchange Act Section 3(h)(1)(C) permits us to 

impose, as part of our authority to exempt funding 

portals from broker registration, ‘‘such other 

Continued 

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–2022–01 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–2022–01. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–MEMX–2022–01 and 

should be submitted on or before April≤ 

6, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.49

Eduardo Aleman, 

Assistant Secretary. 

[FR Doc. 2022–05483 Filed 3–15–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–774, OMB Control No. 

3235–0727] 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736. 

Extension: 

Rules 400–404 of Regulation 

Crowdfunding (Intermediaries) 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) is soliciting comments 

on the collection of information 

provided for Rule 17Ab2–1 (17 CFR 

240.17Ab2–1) and Form CA–1: 

Registration of Clearing Agencies (17 

CFR 249b.200) under the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’) 

(15 U.S.C. 78a et seq.). The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

The collections of information 

required under Rules 400 through 404 is 

mandatory for all funding portals. Form 

Funding Portal helps ensure that the 

Commission can make information 

about funding portals transparent and 

easily accessible to the investing public, 

including issuers and obligated persons 

who engage funding portals; investors 

who may purchase securities through 

offerings on funding portals; and other 

regulators. Further, the information 

provided on Form Funding Portal 

expands the amount of publicly 

available information about funding 

portals, including disciplinary history. 

Consequently, the rules and forms 

allows issuers and the investing public, 

as well as others, to become more fully 

informed about funding portals in a 

more efficient manner. 

Rule 400 requires each person 

applying for registration with the 

Commission as a funding portal to file 

electronically with the Commission 

Form Funding Portal. Rule 400(a) 

requires a funding portal to become a 

member of a national securities 

association registered under Section 

15A of the Exchange Act. Rule 400(b) 

requires a funding portal to file an 

amendment to Form Funding Portal if 

any information previously submitted 

on Form Funding Portal becomes 

inaccurate for any reason. Rule 400(c) 

provides that a funding portal can 

succeed to the business of a predecessor 

funding portal upon the successor filing 

a registration on Form Funding Portal 

and the predecessor filing a withdrawal 

on Form Funding Portal. 

Rule 400(d) requires a funding portal 

to promptly file a withdrawal of 

registration on Form Funding Portal 

upon ceasing to operate as a funding 

portal. Rule 400(e) states that duplicate 

originals of the applications and reports 

provided for in this section must be 

filed with surveillance personnel 

designated by any registered national 

securities association of which the 

funding portal is a member. Rule 400(f) 

requires a nonresident funding portal to: 

(1) Obtain a written consent and power 

of attorney appointing an agent for 

service of process in the United States; 

(2) furnish the Commission with the 

name and address of its agent for 

services of process on Schedule C of 

Form Funding Portal; (3) certify that it 

can, as a matter of law, and will provide 

the Commission and any registered 

national securities association of which 

it becomes a member with prompt 

access to its books and records and can, 

as a matter of law, and will submit to 

onsite inspection and examination by 

the Commission and any registered 

national securities association of which 

it becomes a member; and (4) provide 

the Commission with an opinion of 

counsel and certify on Schedule C on 

Form Funding Portal that the firm can, 

as a matter of law, provide the 

Commission and registered national 

securities association of which it 

becomes a member with prompt access 

to its books and records and can, as a 

matter of law, submit to onsite 

inspection and examination by the 

Commission and any registered national 

securities association of which it 

becomes a member.1


jspears on DSK121TN23PROD with NOTICES1