Federal Register / Vol. 87, No. 92 / Thursday, May 12, 2022 / Notices 29197 

49Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

50 In disapproving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

51 15 U.S.C. 78f(b)(5). 

52 15 U.S.C. 78s(b)(2). 

53 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). 

4Market share percentage calculated as of April 

27, 2022. The Exchange receives and processes data 

made available through consolidated data feeds 

(i.e., CTS and UTDF). 

order types by proposing to reward RML 

Orders with execution priority over 

Eligible Midpoint Peg Orders when 

interacting with Retail Midpoint Orders. 

MEMX cannot resolve potential unfair 

discrimination in favor of RML Orders 

over Eligible Midpoint Peg Orders by 

relying on the fact that users can instead 

use RML Orders; doing so does not 

convert unfair discrimination into fair 

discrimination. When MEMX chooses to 

offer two Midpoint Peg order types but 

treats them differently, each order type 

must independently be consistent with 

the Act and any discriminatory 

treatment must also be consistent with 

the Act. The consistency of one order 

type with the requirements of the Act is 

independent of, and cannot be 

contingent on, the existence of a 

substitute. 

3. MEMX Has Failed To Meet Its Burden 

When assessing this proposed rule 

change, as modified by Amendment No. 

1, the Commission must consider its 

consistency with the Act and the 

applicable rules and regulations issued 

thereunder. As stated above, under the 

Commission’s Rules of Practice, the 

‘‘burden to demonstrate that a proposed 

rule change is consistent with the 

Exchange Act and the rules and 

regulations issued thereunder . . . is on 

the self-regulatory organization that 

proposed the rule change.’’ 49 For the 

foregoing reasons, the Exchange has not 

met its burden to demonstrate that it 

would be consistent with the Act for the 

Exchange to provide a priority 

advantage to one type of midpoint peg 

(RML Orders) over another type of 

midpoint peg (Eligible Midpoint Peg 

Orders). As a result, the Commission 

does not have sufficient information to 

find that the Exchange’s proposal would 

promote just and equitable principles of 

trade and protect investors and the 

public interest, not permit unfair 

discrimination between customers, 

issuers, brokers, or dealers, and promote 

the maintenance of fair and orderly 

markets. Accordingly, the Commission 

must disapprove the proposal because 

the Exchange has not met its burden to 

demonstrate that the proposal is 

consistent with the Act, including 

Section 6(b)(5) and Section 11A of the 

Act.50

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

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

proposed rule change, as modified by 

Amendment No. 1, is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange, and in particular, with 

Section 6(b)(5) of the Act.51

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,52 that the 

proposed rule change (SR–MEMX– 

2021–10), as modified by Amendment 

No. 1, is disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.53

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10152 Filed 5–11–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94863; File No. SR–MEMX– 

2022–11] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule 

May 6, 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 April 29, 

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 

May 2, 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 volume-based pricing 

incentive, referred to by the Exchange as 

the Step-Up Additive Rebate, in which 

a qualifying Member will receive an 

additive rebate for executions of certain 

orders in securities priced at or above 

$1.00 per share that add displayed 

liquidity to the Exchange; (ii) reduce the 

rebate provided under Liquidity 

Provision Tier 1 for executions of orders 

in securities priced at or above $1.00 per 

share that add displayed liquidity to the 

Exchange; and (iii) reduce the rebate 

provided under DLI Tier 2 for 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity to the Exchange. 

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% 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 


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5 Id. 

6As set forth on the Fee Schedule, ‘‘ADAV’’ 

means the average daily added volume calculated 

as the number of shares added per day, which is 

calculated on a monthly basis, and ‘‘Step-Up 

ADAV’’ means ADAV in the relevant baseline 

month subtracted from current ADAV. As set forth 

in Exchange Rule 11.21(a), a ‘‘Retail Order’’ means 

an agency or riskless principal order that meets the 

criteria of FINRA Rule 5320.03 that originates from 

a natural person and is submitted to the Exchange 

by a Retail Member Organization, provided that no 

change is made to the terms of the order with 

respect to price or side of market and the order does 

not originate from a trading algorithm or any other 

computerized methodology. As proposed, Retail 

Orders that add volume are not included in the 

calculations of ADAV and Step-Up ADAV for 

purposes of determining whether a Member 

qualifies for the Step-Up Additive Rebate. 

7As 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. 

8The proposed pricing for the Step-Up Additive 

Rebate is referred to by the Exchange on the Fee 

Schedule under the new description ‘‘Step-Up 

Additive Rebate’’ with a Fee Code of ‘‘X’’ to be 

appended to the otherwise applicable Fee Code 

assigned by the Exchange on the monthly invoices 

for qualifying executions. The Exchange notes that 

because the determination of whether a Member 

qualifies for a certain pricing tier/incentive 

(including the Step-Up Additive Rebate) 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/incentive on 

the monthly invoices, which are provided after 

such determination has been made, as the Exchange 

does for its tier/incentive pricing today. 

9The Exchange notes that a Member that qualifies 

for the Exchange’s NBBO Setter Tier currently 

receives an additive rebate of $0.0003 per share for 

executions of Added Displayed Volume (other than 

Retail Orders) that establish the NBBO (‘‘Setter 

Volume’’). See the Exchange’s Fee Schedule. 

Because executions of Setter Volume already 

receive this relatively high additive rebate under 

the NBBO Setter Tier, the Exchange proposes that 

the Step-Up Additive Rebate would not apply to 

such transactions. Thus, as proposed, a Member 

that qualifies for the NBBO Setter Tier would 

continue to receive the additive rebate of $0.0003 

per share for executions of Setter Volume under the 

NBBO Setter Tier but would not also receive the 

additive rebate of $0.0002 per share under the StepUp Additive Rebate even if the Member qualifies for 

the Step-Up Additive Rebate. 

10The Exchange notes that it currently provides 

a rebate of $0.0035 per share for executions of Retail 

Orders that constitute Added Displayed Volume, 

which is the highest base rebate (i.e., excluding any 

enhanced and/or additive rebates resulting from 

pricing tiers/incentives) that the Exchange currently 

provides with respect to any type of transaction 

effected on the Exchange. Because the base rebate 

for this type of transaction is already high relative 

to other types of transactions, the Exchange 

proposes that the Step-Up Additive Rebate would 

not apply to such transactions. This is consistent 

with the Exchange’s application of the $0.0003 per 

share additive rebate provided under NBBO Setter 

Tier, which also does not apply to executions of 

Retail Orders. See the Exchange’s Fee Schedule. 

11See, e.g., the Exchange’s Fee Schedule, which 

reflects enhanced rebates for executions of Added 

Displayed Volume for Members that qualify for the 

Liquidity Provision Tiers by achieving certain 

specified volume thresholds, including thresholds 

based on Step-Up ADAV; see also the Cboe BZX 

Exchange, Inc. equities trading fee schedule on its 

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

us/equities/membership/fee_schedule/bzx/), which 

reflects enhanced rebates for executions of added 

displayed volume for firms that qualify for the 

‘‘Step-Up Tiers’’ by achieving certain specified 

volume thresholds, including thresholds based on 

Step-Up ADAV. 

12The 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. 

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. 

Adoption of Step-Up Additive Rebate 

The Exchange currently provides 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 to the Exchange 

(such orders, ‘‘Added Displayed 

Volume’’). The Exchange also currently 

offers various volume-based tiers and 

incentives in which a Member may 

receive an enhanced or additive rebate 

for executions of Added Displayed 

Volume by achieving the specified 

volume criteria that corresponds to a 

particular tier/incentive. The Exchange 

now proposes to adopt a new volumebased incentive, referred to by the 

Exchange as the Step-Up Additive 

Rebate, in which the Exchange will 

provide an additive rebate of $0.0002 

per share for executions of certain 

orders that constitute Added Displayed 

Volume for a Member that qualifies for 

the Step-Up Additive Rebate by 

achieving a Step-Up ADAV (other than 

Retail Orders) 6 from April 2022 of at 

least 0.07% of the TCV.7 As proposed, 

a Member that qualifies for the Step-Up 

Additive Rebate will receive the 

additive rebate of $0.0002 per share 8 in 

addition to the rebate that is otherwise 

applicable (including a rebate provided 

under another pricing tier/incentive) for 

each of such Member’s executions of 

orders that constitute Added Displayed 

Volume, except: (i) Orders that establish 

the national best bid or offer (‘‘NBBO’’) 

if such Member qualifies for the 

Exchange’s NBBO Setter Tier; 9 and (ii) 

and Retail Orders.10 The Exchange notes 

that the Step-Up Additive Rebate will 

not apply to executions of orders in 

securities priced below $1.00 per share. 

The Exchange believes that the 

proposed Step-Up Additive Rebate 

provides an incremental incentive for 

Members to strive for higher ADAV on 

the Exchange (above their ADAV in the 

month immediately preceding the 

effectiveness of this proposal—i.e., 

April 2022) to receive the proposed 

additive rebate for qualifying executions 

of Added Displayed Volume. As such, 

the proposed Step-Up Additive Rebate 

is designed to incentivize Members that 

provide liquidity on the Exchange to 

increase their orders that add liquidity 

to the Exchange in order to qualify for 

the $0.0002 per share additive rebate for 

qualifying 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 and enhancing the 

attractiveness of the Exchange as a 

trading venue. The Exchange notes that 

the proposed Step-Up Tier Additive 

Rebate is comparable to other volumebased incentives and discounts, which 

have been widely adopted by exchanges 

(including the Exchange), including 

pricing incentives that provide an 

enhanced rebate for firms that achieve a 

specified Step-Up ADAV threshold.11

Reduced Rebate Under Liquidity 

Provision Tier 1 

The Exchange also proposes to reduce 

the rebate provided under Liquidity 

Provision Tier 1 for executions of 

Added Displayed Volume from 

$0.00325 per share to $0.0032 per 

share.12 The Exchange believes that the 

proposed rebate represents only a 

modest decrease from the current rebate 

provided under Liquidity Provision Tier 

1 for executions of Added Displayed 

Volume. 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 


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13The proposed pricing for DLI Tier 2 is referred 

to by the Exchange on the Fee Schedule under the 

existing description ‘‘Added displayed volume, DLI 

Tier 2’’ with a Fee Code of ‘‘Bq2’’, ‘‘Dq2’’ or ‘‘Jq2’’, 

as applicable, to be provided by the Exchange on 

the monthly invoices provided to Members. 

14See the Exchange’s 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). 

15 15 U.S.C. 78f. 

16 15 U.S.C. 78f(b)(4) and (5). 

17Securities Exchange Act Release No. 51808 

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

18See supra note 11. 

19 Id. 

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 does not propose to 

change the required criteria for a 

Member to qualify for Liquidity 

Provision Tier 1 or the rebate provided 

under Liquidity Provision Tier 1 for 

executions of orders in securities priced 

below $1.00 per share. 

Reduced Rebate Under DLI Tier 2 

Lastly, the Exchange proposes to 

reduce the rebate provided under DLI 

Tier 2 for executions of Added 

Displayed Volume from $0.0031 per 

share to $0.0030 per share.13 The 

Exchange believes that the proposed 

rebate represents only a modest 

decrease from the current rebate 

provided under DLI Tier 2 for 

executions of Added Displayed Volume. 

The Exchange does not propose to 

change the required criteria for a 

Member to qualify for DLI Tier 2 or the 

rebate provided under DLI Tier 2 for 

executions of orders in securities priced 

below $1.00 per share. 

The DLI Tiers are designed to 

encourage Members 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.14 The 

purpose of reducing the enhanced 

rebate for executions of Added 

Displayed Volume under DLI Tier 2 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 

and promoting the price discovery and 

market quality objectives of the DLI 

Tiers described above. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,15

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

6(b)(5) of the Act,16 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 

determining prices and SRO revenues 

and also recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 17

The 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 orders that add 

liquidity to the Exchange, which the 

Exchange believes would deepen 

liquidity and promote market quality on 

the Exchange to the benefit of all market 

participants, as well as 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. 

As noted above, volume-based 

incentives and discounts have been 

widely adopted by exchanges (including 

the Exchange),18 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 the value 

to an exchange’s market quality 

associated with higher levels of market 

activity, such as higher levels of 

liquidity provision and/or growth 

patterns, and the introduction of higher 

volumes of orders into the price and 

volume discovery process. The 

Exchange believes that the proposed 

Step-Up Additive Rebate is comparable 

to other incentives currently offered by 

other exchanges, as well as the 

Exchange,19 and 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 

increase their orders that add liquidity 

on the Exchange in order to qualify for 

an additive rebate for qualifying 

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. As such, the 

Exchange believes the proposed 

additive rebate for qualifying executions 

of Added Displayed Volume provided 

under the Step-Up Additive Rebate for 

qualifying Members is reasonably 

related to the market quality benefits 

that such incentive is designed to 

promote. 

The Exchange also believes it is 

reasonable, equitable and not unfairly 

discriminatory for the $0.0002 additive 

rebate provided under the Step-Up 

Additive Rebate to not apply to 

executions of Setter Volume or Retail 

Orders that constitute Added Displayed 

Volume, as such orders already receive 


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20See supra notes 9 and 10. 

21 15 U.S.C. 78f(b)(4) and (5). 22See supra note 17. 

a relatively high additive rebate and 

base rebate, respectively.20 However, 

the Exchange notes that the proposed 

Step-Up Additive Rebate will not 

adversely impact any Member’s ability 

to qualify for reduced fees or enhanced 

rebates offered under other pricing tiers/ 

incentives; should a Member not meet 

the required criteria, the Member will 

merely not receive the corresponding 

additive rebate. 

The Exchange also believes that the 

proposed reduced rebates for executions 

of Added Displayed Volume provided 

under Liquidity Provision Tier 1 and 

DLI Tier 2 are reasonable and consistent 

with an equitable allocation of fees and 

rebates, in that the Exchange believes 

that each such reduced rebate represents 

only a modest decrease from the current 

rebate provided under the respective 

tier for executions of Added Displayed 

Volume (i.e., from $0.00325 per share to 

$0.0032 per share under Liquidity 

Provision Tier 1 and from $0.0031 per 

share to $0.0030 per share under DLI 

Tier 2), and 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. The Exchange further believes 

that such proposed reduced rebates are 

equitably allocated and not unfairly 

discriminatory because they will 

continue to apply equally to all 

Members, in that all Members will 

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 more 

stringent criteria under the Liquidity 

Provision Tiers and the DLI Tiers would 

continue to correlate to, and remain 

commensurate with, the corresponding 

tier’s higher 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 21 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 incentivize market 

participants to direct additional orders 

that add liquidity to the Exchange, 

thereby deepening liquidity and 

promoting market quality on the 

Exchange to the benefit of all market 

participants, as well as 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. 

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.’’ 22

Intramarket Competition 

As discussed above, the Exchange 

believes that the proposal would 

incentivize Members to submit 

additional orders that add liquidity to 

the Exchange, 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 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. As described above, the 

opportunity to qualify for the proposed 

new Step-Up Additive Rebate, and thus 

receive the proposed additive rebate for 

qualifying executions of Added 

Displayed Volume, would be available 

to all Members that meet the associated 

volume requirement, and the Exchange 

believes the proposed additive rebate 

provided under such incentive is 

reasonably related to the enhanced 

market quality that it is designed to 

promote. Additionally, as noted above, 

the proposed reduced rebates for 

executions of Added Displayed Volume 

under Liquidity Provision Tier 1 and 

DLI Tier 2 would continue to apply 

equally to all Members in the same 

manner that the rebates provided under 

such tiers currently do today, and the 

Exchange believes that each such 

reduced rebate represents only a modest 

decrease from the current rebate 

provided under the respective tier for 

executions of Added Displayed Volume. 

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% 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, and market participants can 

readily choose to send their orders to 

other exchange and off-exchange venues 

if they deem fee levels at those other 

venues to be more favorable. As 

described above, the proposed changes 

represent a competitive proposal 

through which the Exchange is seeking 

to decrease the Exchange’s expenditures 

with respect to its transaction pricing 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 87, No. 92 / Thursday, May 12, 2022 / Notices 29201 

23See supra note 11. 

24See supra note 17. 

25NetCoalition 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)). 

26 15 U.S.C. 78s(b)(3)(A)(ii). 

27 17 CFR 240.19b–4(f)(2). 

28 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

and to encourage additional order flow 

to the Exchange through a volume-based 

incentive that is comparable to volumebased incentives adopted by other 

exchanges and the Exchange.23

Accordingly, the Exchange believes the 

proposal would not burden, but rather 

promote, intermarket competition by 

enabling it to better compete with other 

exchanges that offer similar pricing 

incentives 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.’’ 24 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’ . . . .’’.25 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 26 and Rule 

19b–4(f)(2) 27 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–2022–11 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–2022–11. 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–2022–11 and 

should be submitted on or before June 

2, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10148 Filed 5–11–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94862; File No. SR– 

CboeBYX–2022–016] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend Its 

Fee Schedule 

May 6, 2022. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on May 2, 

2022, Cboe BYX Exchange, Inc. 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BYX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’ or ‘‘BYX 

Equities’’) is filing with the Securities 

and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to amend its Fee Schedule. The text of 


khammond on DSKJM1Z7X2PROD with NOTICES