32090 Federal Register / Vol. 86, No. 114 / Wednesday, June 16, 2021 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 See Exchange Rule 1.5(p). 

4 Pegged 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 national best bid and/or offer (‘‘NBBO’’). 

5 A 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). 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Exchange consents, 

the Commission shall: (a) By order 

approve or disapprove such proposed 

rule change, or (b) institute proceedings 

to determine whether the proposed rule 

change should be 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– 

CboeBZX–2021–042 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–CboeBZX–2021–042. 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–CboeBZX–2021–042, and 

should be submitted on or before July 7, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12591 Filed 6–15–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92150; File No. SR–MEMX– 

2021–07] 

Self-Regulatory Organizations; MEMX 

LLC; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend the Exchange’s Fee 

Schedule 

June 10, 2021. 

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 June 1, 

2021, MEMX LLC (‘‘MEMX’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the 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 

June 1, 2021. 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 pricing incentive (the 

‘‘Displayed Liquidity Incentive’’ or 

‘‘DLI’’) designed to improve market 

quality on the Exchange in certain 

specific securities and more generally in 

the form of an enhanced rebate for 

executions of displayed orders in 

securities priced at or above $1.00 per 

share that add liquidity to the Exchange 

(such orders, ‘‘Added Displayed 

Volume’’) for Members that meet certain 

minimum quoting requirements across a 

specified number of securities, as 

further described below; (ii) introduce a 

tiered pricing structure applicable to the 

rebates provided for executions of 

Added Displayed Volume; (iii) adopt an 

enhanced rebate for executions of 

Pegged Orders 4 with a Midpoint Peg 5

instruction in securities priced at or 

above $1.00 per share (such orders, 

‘‘Midpoint Peg Orders’’) that add 

liquidity to the Exchange; (iv) 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’’); and (v) reduce the standard 

rebate for executions of Added 

Displayed Volume. 

The Exchange first notes that it 

operates in a highly competitive market 

in which market participants can 

readily direct order flow to competing 

venues if they deem fee levels at a 

particular venue to be excessive or 

incentives to be insufficient. More 

specifically, the Exchange is only one of 

16 registered equities exchanges, as well 

as a number of alternative trading 

systems and other off-exchange venues, 

to which market participants may direct 

their order flow. Based on publicly 

available information, no single 


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6 Market share percentage calculated as of May 

27, 2021. The Exchange receives and processes data 

made available through consolidated data feeds 

(i.e., CTS and UTDF). 

7 Id. 

8 As proposed, the term ‘‘NBBO Time’’ means the 

aggregate of the percentage of time during regular 

trading hours during which one of a Member’s 

market participant identifiers (‘‘MPIDs’’) has a 

displayed order of at least one round lot at the 

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

(‘‘NBO’’). If an MPID has a displayed order of at 

least one round lot at both the NBB and the NBO, 

the quoting activity on each side will be aggregated 

and counted toward the NBBO Time. As an 

example, where a Member’s MPID has a displayed 

order of at least one round lot at the NBB for 20% 

of the time during regular trading hours and a 

displayed order of at least one round lot at the NBO 

for 10% of the time during regular trading hours for 

a security, the Member’s NBBO Time with respect 

to that MPID for that security would be 30%. Thus, 

it is possible for a single MPID to have an NBBO 

Time for a security of up to 200% for a particular 

day under this proposal. As proposed, the term 

‘‘regular trading hours’’ refers to the time between 

9:30 a.m. and 4:00 p.m. Eastern Time, or such 

shorter period as may be designated by the 

Exchange on a day when the securities markets 

close early. 

9 As proposed, the term ‘‘DLI Target 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. 

The Exchange anticipates that the initial DLI Target 

Securities list will include between 275 and 300 

securities. The DLI Target Securities list will always 

include at least 75 securities and may be 

periodically updated by the Exchange, provided 

that the Exchange will not remove a security from 

the DLI Target Securities list without at least 30 

days’ prior notice to Members as published on the 

Exchange’s website (unless the security is no longer 

eligible for trading on the Exchange). 

10 For example, if a Member has four MPIDs and 

each MPID has an NBBO Time of 30% in a different 

security, this will count as four securities in which 

such Member has met the quoting requirement for 

that day. 

11 Thus, if a Member has two MPIDs that meet 

the quoting requirement in the same security for a 

particular day, this will only count as one security 

for purposes of determining the total number of 

securities in which such Member has met the 

quoting requirement for that day. 

12 As an example, assume that a Member has two 

MPIDs, and that MPID 1 has an NBBO Time of 15% 

and MPID 2 has an NBBO Time of 20% in the same 

security for a particular day. In this event, such 

Member would not meet the quoting requirement in 

that security for that day as it does not have an 

MPID with an NBBO Time of at least 25% in that 

security for that day. The Exchange notes that The 

Nasdaq Stock Market LLC (‘‘Nasdaq’’) uses this 

same methodology when calculating the time that 

a member quotes at the NBBO under its Qualified 

Market Maker program. See infra note 17; see also 

Securities Exchange Act Release No. 77662 (April 

20, 2016), 81 FR 24681, 24682 (April 26, 2016) (SR– 

NASDAQ–2016–051). 

13 As an example, in a month with 20 trading 

days, if a Member’s MPIDs collectively satisfied the 

quoting requirement in 125 securities (of which 25 

were DLI Target Securities) for ten of the trading 

days in the month, and collectively satisfied the 

quoting requirement in 375 securities (of which 125 

were DLI Target Securities) for the other ten trading 

days in the month, such Member would meet the 

quoting requirement in an average of 250 securities 

(i.e., ((125 × 10) + (375 × 10))/20), inclusive of an 

average of 75 DLI Target Securities (i.e., ((25 × 10) 

+ (125 × 10))/20), per trading day during the month. 

Therefore, such Member would meet both of the 

applicable securities requirements during the 

month and would qualify for the DLI for that month 

under this proposal. 

registered equities exchange currently 

has more than approximately 16% of 

the total market share of executed 

volume of equities trading.6 Thus, in 

such a low-concentrated and highly 

competitive market, no single equities 

exchange possesses significant pricing 

power in the execution of order flow, 

and the Exchange currently represents 

approximately 2.4% of the overall 

market share.7

Adoption of Displayed Liquidity 

Incentive 

The Exchange proposes to adopt a 

new pricing incentive, referred to by the 

Exchange as the ‘‘Displayed Liquidity 

Incentive’’ or ‘‘DLI’’, in the form of an 

enhanced rebate for executions of 

Added Displayed Volume for Members 

that qualify for the DLI by meeting 

certain minimum quoting requirements 

across a specified number of securities, 

as further described below. The 

proposed DLI is designed to encourage 

Members to improve market quality on 

the Exchange in certain specific 

securities and more generally. As 

proposed, a Member will qualify for the 

DLI, and thus receive the proposed 

enhanced rebate for executions of 

Added Displayed Volume described 

below, if the Member’s NBBO Time 8 is 

at least 25% in an average of at least 250 

securities, at least 75 of which must be 

DLI Target Securities,9 per trading day 

during the month. Under this proposal, 

the Exchange will determine on a daily 

basis the number of securities in which 

each of a Member’s MPIDs meets the 

25% NBBO Time requirement (the 

‘‘quoting requirement’’) for that day. 

The Exchange will then aggregate the 

number of securities in which each of a 

Member’s MPIDs meets the quoting 

requirement to determine the total 

number of securities in which such 

Member meets the quoting requirement 

for that day.10 However, a single 

security in which more than one of such 

Member’s MPIDs meets the quoting 

requirement for that day will only be 

counted once for this purpose.11

Additionally, as proposed, the quoting 

requirement with respect to a security 

must be met by a single MPID achieving 

the requisite NBBO Time for that day, 

and the NBBO Time of multiple MPIDs 

will not be aggregated to determine if 

the Member has met the quoting 

requirement in that security.12

As noted above, to qualify for the DLI, 

a Member must meet the quoting 

requirement in an average of at least 250 

securities traded on the Exchange (the 

‘‘250 securities requirement’’), at least 

75 of which must be DLI Target 

Securities (the ‘‘75 DLI Target Securities 

requirement’’), per trading day during 

the month. Each of the 250 securities 

requirement and the 75 DLI Target 

Securities requirement is referred to 

under this proposal as a ‘‘securities 

requirement.’’ The proposed DLI is 

designed to enhance market quality both 

in a broad manner with respect to all 

securities traded on the Exchange, 

through the 250 securities requirement, 

and in a targeted manner with respect 

to certain designated securities in which 

the Exchange specifically seeks to inject 

additional quoting competition (i.e., the 

DLI Target Securities), through the 75 

DLI Target Securities requirement. The 

number of DLI Target Securities in 

which a Member meets the quoting 

requirement will be counted toward 

both the 75 DLI Target Securities 

requirement and the 250 securities 

requirement. In order to determine 

whether a Member meets the applicable 

securities requirements during a month, 

the average number of securities in 

which such Member meets the quoting 

requirement per trading day during the 

month will be calculated by summing 

the number of securities in which each 

of such Member’s MPIDs met the 

quoting requirement for each trading 

day during the month then dividing the 

resulting sum by the total number of 

trading days in the month.13 The 

Exchange proposes to add notes to the 

Fee Schedule describing the criteria for 

determining whether a Member 

qualifies for the DLI and the related 

calculation methodologies described 

above. 

In addition, the Exchange will 

exclude for purposes of determining 

qualification for the Displayed Liquidity 

Incentive: (1) Any trading day that the 

Exchange’s system experiences a 

disruption that lasts for more than 60 

minutes during regular trading hours 

(‘‘Exchange System Disruption Days’’); 

and (2) the day that Russell Investments 

reconstitutes its family of indexes (the 

‘‘Russell Reconstitution Day’’), which 

occurs annually on the last Friday in 

June. The Exchange will exclude 

Exchange System Disruption Days and 

the Russell Reconstitution Day when 

determining both the numerator (i.e., 

the number of securities in which a 

Member’s MPIDs met the quoting 

requirement for each trading day during 

the month) and the denominator (i.e., 

the total number of trading days in the 

month) for purposes of calculating the 

average number of securities in which 

such Member meets the quoting 


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32092 Federal Register / Vol. 86, No. 114 / Wednesday, June 16, 2021 / Notices 

14 See, e.g., the Cboe BZX Exchange, Inc. (‘‘Cboe 

BZX’’) equities trading fee schedule on its public 

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

equities/membership/fee_schedule/bzx/); the Cboe 

EDGX Exchange, Inc. equities trading fee schedule 

on its public website (available at https://

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

schedule/edgx/). 

15 As described further below, the Exchange is 

also proposing to specify on the Fee Schedule that 

the lowest fee/highest rebate will apply if a Member 

qualifies for multiple fees/rebates with respect to a 

particular transaction. Retail Orders in securities 

priced at or above $1.00 per share that are displayed 

and add liquidity to the Exchange receive a rebate 

that is higher than the proposed enhanced rebate for 

Members that qualify for the DLI. Thus, under the 

Exchange’s proposed pricing structure, a Member 

that qualifies for the DLI would not receive the 

proposed DLI enhanced rebate for executions of 

displayed Retail Orders that add liquidity to the 

Exchange but instead would receive the rebate 

applicable to executions of liquidity-adding 

displayed Retail Orders. 

16 This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the new 

description ‘‘Added displayed volume, DLI’’ with a 

Fee Code of ‘‘Bq’’, ‘‘Dq’’ or ‘‘Jq’’, as applicable, to 

be provided by the Exchange on the monthly 

invoices provided to Members. The Exchange notes 

that because the determination of whether a 

Member qualifies for the DLI 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 (i.e., ‘‘B’’, ‘‘D’’ or 

‘‘J’’) on the execution reports provided to Members 

during the month and will only designate the Fee 

Codes of ‘‘Bq’’, ‘‘Dq’’ or ‘‘Jq’’ on the monthly 

invoices, which are provided after such 

determination has been made. 

17 See, e.g., the Nasdaq equities trading fee 

schedule on its public website, available at http:// 

www.nasdaqtrader.com/ 

trader.aspx?id=pricelisttrading2) and Nasdaq Rule 

requirement per trading day during the 

month. 

As further detail regarding such 

proposed exclusions, an Exchange 

system disruption may occur, for 

example, where a certain group of 

securities traded on the Exchange is 

unavailable for trading due to an 

Exchange system issue. Similarly, the 

Exchange may be able to perform certain 

functions with respect to accepting and 

processing orders, but may have a 

failure to another significant process, 

such as routing to other market centers, 

that would lead Members that rely on 

such process to avoid utilizing the 

Exchange until the Exchange’s entire 

system was operational. The Exchange 

believes that these types of Exchange 

system disruptions could preclude 

Members from participating on the 

Exchange to the extent that they might 

have otherwise participated on such 

days, and thus, the Exchange believes it 

is appropriate to exclude such days 

when determining whether a Member 

meets the applicable securities 

requirements during a month to avoid 

penalizing Members that might 

otherwise have met such requirements. 

For similar reasons, the Exchange 

believes it is appropriate to exclude the 

Russell Reconstitution Day in the same 

manner, as the Exchange believes that 

the Russell Reconstitution Day typically 

has extraordinarily high and abnormally 

distributed trading volumes, and the 

Exchange believes this change to normal 

activity may affect a Member’s ability to 

meet the quoting requirement across 

various securities on that day. The 

Exchange notes that the exclusion of 

Exchange System Disruption Days and 

the Russell Reconstitution Day is 

consistent with the methodologies used 

by other exchanges when calculating 

certain member trading and other 

volume metrics for purposes of 

determining whether members qualify 

for certain pricing incentives, and the 

Exchange believes application of this 

methodology is similarly appropriate for 

the proposed DLI pricing incentive.14

A Member that qualifies for the DLI 

by meeting the requirements described 

above during a particular month will 

receive an enhanced rebate of $0.0036 

per share for all executions of Added 

Displayed Volume (unless a higher 

rebate applies 15) during that month.16

This proposed enhanced rebate is 

$0.0005 higher than the standard rebate 

that would otherwise be applicable to 

such executions, which the Exchange is 

proposing to reduce from $0.0034 to 

$0.0031, as further described below. The 

proposed enhanced rebate will apply to 

all executions of Added Displayed 

Volume (other than orders receiving a 

higher rebate, such as Retail Orders) 

entered by each MPID of a qualifying 

Member; thus, if a Member qualifies for 

the DLI as a result of its quoting activity 

from one of its MPIDs during a month, 

the qualifying Member will receive the 

proposed enhanced rebate of $0.0036 

per share for all executions of Added 

Displayed Volume (unless a higher 

rebate applies) entered by that MPID as 

well as those entered by each of its other 

MPIDs during that month. The 

Exchange notes that the proposed 

enhanced rebate will only apply to 

executions in securities priced at or 

above $1.00 per share; executions of a 

qualifying Member’s displayed orders 

that add liquidity to the Exchange in 

securities priced below $1.00 per share 

will continue to receive the standard 

rebate applicable to executions of such 

orders on the Exchange (i.e., 0.05% of 

the total dollar value of the transaction). 

The Exchange is proposing to provide 

the enhanced rebate for executions of 

Added Displayed Volume for qualifying 

Members as a means of recognizing the 

value of market participants that 

consistently quote at the NBBO in a 

large number of securities, generally, 

and in the DLI Target Securities, in 

particular. Even when such market 

participants are not formally registered 

as market makers, they risk capital by 

offering immediately executable 

liquidity at the price most favorable to 

market participants on the opposite side 

of the market. Such activity promotes 

price discovery and dampens volatility 

and enhances the attractiveness of the 

Exchange as a trading venue. Given the 

proposed requirements to qualify for the 

DLI, a Member must make a significant 

contribution to market quality by 

providing liquidity at the NBBO in a 

large number of securities, including 

certain designated securities in which 

the Exchange specifically seeks to inject 

additional quoting competition (i.e., the 

DLI Target Securities), for a significant 

portion of the day. 

A Member that qualifies for the DLI 

may be, but is not required to be, a 

registered market maker in any security; 

thus, qualifying for the DLI does not by 

itself impose a two-sided or any other 

quotation obligation or convey any of 

the benefits associated with being a 

registered market maker. Qualification 

for the DLI will, however, reflect the 

Member’s commitment to provide 

meaningful and consistent support to 

market quality and price discovery by 

extensive quoting at the NBBO in a large 

number of securities, including the DLI 

Target Securities. Thus, this proposal is 

designed to attract liquidity both from 

traditional market makers and from 

other firms that are willing to commit 

capital to support liquidity at the NBBO. 

Through the proposed enhanced rebate 

for qualifying Members, the Exchange 

hopes to provide improved trading 

conditions for all market participants 

through narrower bid-ask spreads and 

increased depth of liquidity available at 

the NBBO for a large number of 

securities, generally, including the DLI 

Target Securities, in particular. In 

addition, the proposal reflects an effort 

to use a financial incentive to encourage 

a wider variety of Members, including 

Members that may be characterized as 

high-frequency trading firms, to make 

positive commitments to promote 

market quality. 

The Exchange notes that the proposed 

DLI is similar in structure and purpose 

to pricing programs in place at other 

exchanges that are designed to enhance 

market quality by incentivizing 

members to achieve minimum quoting 

standards, including minimum quoting 

at the NBBO in a large number of 

securities, generally, or certain 

designated securities, in particular.17


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Equity 7, Section 114(d) describing Nasdaq’s 

Qualified Market Maker Program, which provides 

for an additional rebate (ranging from $0.0001 to 

$0.0002 per share) for executions of liquidityproviding displayed orders (other than designated 

retail orders) in securities across all tapes priced at 

or above $1.00 per share for members that, in 

addition to executing transactions that represent a 

specified percentage of consolidated volume and 

avoiding inefficient order entry practices that place 

excessive burdens on Nasdaq’s systems, quote at the 

NBBO at least 25% of the time during regular 

market hours in an average of at least 1,000 

securities per day during the month; see also the 

Cboe BZX equities trading fee schedule on its 

public website (available at https://

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

schedule/bzx/), which provides for an additional 

rebate (ranging from $0.0001 to $0.0002 per share) 

under Cboe BZX’s Liquidity Management Program 

for executions of liquidity-providing displayed 

orders in Tape B securities priced at or above $1.00 

per share for members that, in addition to adding 

a specified percentage of total consolidated volume 

in Tape B securities and meeting certain other 

quoting requirements with respect to a specified 

number of securities designated as ‘‘LMP 

Securities’’ on a list determined by Cboe BZX, quote 

at the NBBO at least 15% of the time during regular 

trading hours in a specified number of such 

designated LMP Securities (or achieve an 

alternative NBBO quoting standard involving a sizesetting element with respect to such designated 

LMP Securities). 

18 Id. 

19 As proposed, the term ‘‘ADAV’’ means the 

average daily added volume calculated as the 

number of shares added per day. 

20 This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the new 

description ‘‘Added displayed volume, Liquidity 

Provision Tier’’ with a Fee Code of ‘‘B1’’, ‘‘D1’’ or 

‘‘J1’’, as applicable, to be provided by the Exchange 

on the monthly invoices provided to Members. The 

Exchange notes that because the determination of 

whether a Member qualifies for the Liquidity 

Provision Tier for a particular month will not be 

made until after the month-end, the Exchange will 

provide the Fee Codes otherwise applicable to such 

transactions (i.e., ‘‘B’’, ‘‘D’’ or ‘‘J’’) on the execution 

reports provided to Members during the month and 

will only designate the Fee Codes of ‘‘B1’’, ‘‘D1’’ or 

‘‘J1’’ on the monthly invoices, which are provided 

after such determination has been made. 

21 See supra note 14 and accompanying text. 

22 This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the new 

description ‘‘Added non-displayed volume, 

Midpoint Peg’’ and such orders will continue to 

receive a Fee Code of ‘‘M’’ assigned by the 

Exchange. 

The Exchange further notes that, like the 

proposed DLI, these programs include 

as an incentive the provision of an 

enhanced rebate for executions of 

liquidity-adding displayed orders for 

members that meet the quoting and 

other requirements of those programs.18

In addition to the foregoing changes, 

the Exchange proposes to add to the Fee 

Schedule definitions of the terms 

‘‘MPID’’, ‘‘DLI Target Securities’’, 

‘‘quoting requirement’’, ‘‘regular trading 

hours’’ and ‘‘securities requirement’’ 

that are consistent with the descriptions 

of those terms set forth above, as such 

terms are used in the notes describing 

the calculation methodologies and 

criteria for determining whether a 

Member qualifies for the DLI that the 

Exchange is proposing to add to the Fee 

Schedule, as described above. 

Adoption of Liquidity Provision Tier 

The Exchange is also proposing to 

introduce a tiered pricing structure 

applicable to the rebates provided for 

executions of Added Displayed Volume. 

Specifically, the Exchange proposes to 

adopt a new volume-based tier, referred 

to by the Exchange as the ‘‘Liquidity 

Provision Tier’’, in which the Exchange 

will provide an enhanced rebate for 

executions of Added Displayed Volume 

for Members that meet a certain 

specified volume threshold on the 

Exchange. Currently, the Exchange 

provides a standard rebate of $0.0034 

per share for executions of Added 

Displayed Volume, which the Exchange 

is proposing to reduce to $0.0031, as 

further described below. The Exchange 

now proposes to introduce a tiered 

pricing structure in which it will 

provide an enhanced rebate of $0.00335 

per share for executions of Added 

Displayed Volume for Members that 

qualify for the Liquidity Provision Tier 

by achieving an ADAV 19 of 15,000,000 

shares or more.20 As proposed, ADAV 

will be calculated on a monthly basis, 

and Members that qualify for the 

Liquidity Provision Tier by achieving 

the specified ADAV threshold in a 

particular month will receive the 

proposed enhanced rebate of $0.00335 

per share for all executions of Added 

Displayed Volume in that month (unless 

a higher rebate applies). 

Similar to the exclusion for purposes 

of determining qualification for the 

Displayed Liquidity Incentive, the 

Exchange proposes to exclude from the 

calculation of ADAV: (1) Any Exchange 

System Disruption Days; and (2) the 

Russell Reconstitution Day, which 

occurs annually on the last Friday in 

June.21 As is true with respect to the 

Displayed Liquidity Incentive, the 

Exchange believes that Exchange system 

disruptions could preclude Members 

from participating on the Exchange to 

the extent that they might have 

otherwise participated on such days, 

and thus, the Exchange believes it is 

appropriate to exclude such days when 

determining whether a Member 

qualifies for the Liquidity Provision Tier 

to avoid penalizing Members that might 

otherwise have met the applicable 

volume threshold. For similar reasons, 

the Exchange believes it is appropriate 

to exclude the Russell Reconstitution 

Day in the same manner, as the 

Exchange believes the change to normal 

activity may affect a Member’s ability to 

add liquidity to the Exchange on that 

day. 

The Exchange believes that the 

proposed tiered pricing structure 

provides an incremental incentive for 

Members to strive for higher ADAV on 

the Exchange to receive the proposed 

enhanced rebate for executions of 

Added Displayed Volume. As such, the 

proposed Liquidity Provision Tier is 

designed to encourage Members that 

provide liquidity on the Exchange to 

maintain or increase their order flow, 

thereby contributing to a deeper and 

more liquid market to the benefit of all 

market participants and enhancing the 

attractiveness of the Exchange as a 

trading venue. 

Adoption of Enhanced Rebate for Added 

Midpoint Volume 

The Exchange is also proposing to 

adopt an enhanced rebate for executions 

of Midpoint Peg Orders that add 

liquidity to the Exchange (such orders, 

‘‘Added Midpoint Volume’’). Currently, 

the Exchange provides a standard rebate 

of $0.0020 per share for all executions 

of non-displayed orders in securities 

priced at or above $1.00 per share that 

add liquidity to the Exchange, including 

executions of Added Midpoint Volume. 

The Exchange now proposes to adopt an 

enhanced rebate for executions of 

Added Midpoint Volume of $0.0025 per 

share,22 while all other executions of 

non-displayed orders in securities 

priced at or above $1.00 per share that 

add liquidity to the Exchange will 

continue to receive the standard rebate 

for such transactions (i.e., $0.0020 per 

share). The Exchange notes that 

executions of orders with a Midpoint 

Peg instruction that add liquidity to the 

Exchange in securities priced below 

$1.00 per share will continue to receive 

the standard rebate applicable to 

executions of such orders on the 

Exchange (i.e., 0.05% of the total dollar 

value of the transaction). 

The purpose of the proposed 

enhanced rebate for executions of 

Added Midpoint Volume is to 

encourage Members that provide 

liquidity through non-displayed orders 

to do so, to a greater extent, through 

orders that offer price improvement to 

the benefit of other market participants. 

While the Exchange’s pricing structure 

is generally designed to encourage the 

provision of liquidity through displayed 

orders, as the rebates provided with 

respect to such orders are consistently 

higher than those for non-displayed 

orders, the proposed enhanced rebate 

for executions of Added Midpoint 

Volume reflects a concomitant goal of 

encouraging Members that use nondisplayed orders to offer price 


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23 See the Nasdaq PHLX LLC equities trading fee 

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

www.nasdaqtrader.com/Trader.aspx?id=PSX_

Pricing), which reflects a standard rebate of $0.0023 

per share for adding non-displayed liquidity via an 

order that is pegged to the midpoint of the NBBO 

in a security priced at or above $1.00 per share. 

24 This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the existing 

description ‘‘Removed volume from MEMX Book’’ 

and such orders will continue to receive a Fee Code 

of ‘‘R’’ assigned by the Exchange. 

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

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

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

schedule/bzx/); the Cboe EDGX Exchange, Inc. 

(‘‘Cboe EDGX’’) equities trading fee schedule on its 

public website (available at https://

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

schedule/edgx/); Nasdaq Rule Equity 7, Section 

118(a). 

26 This proposed pricing is referred to by the 

Exchange on the Fee Schedule under the existing 

description ‘‘Added displayed volume’’ and such 

orders will continue to receive a Fee Code of ‘‘B’’, 

‘‘D’’ or ‘‘J’’, as applicable, assigned by the Exchange. 

27 See the MIAX PEARL, LLC equities trading fee 

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

www.miaxoptions.com/sites/default/files/fee_

schedule-files/MIAX_PEARL_Equities_Fee_

Schedule_01012021.pdf), which reflects a standard 

rebate of $0.0032 per share to add displayed 

liquidity in Tape A and Tape C securities priced at 

or above $1.00 per share and a standard rebate of 

$0.0035 per share to add displayed liquidity in 

Tape B securities priced at or above $1.00 per share. 

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

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

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

schedule/bzx/), which provides ‘‘To the extent a 

Member qualifies for higher rebates and/or lower 

fees than those provided by a tier for which such 

Member qualifies, the higher rebates and/or lower 

fees shall apply.’’ 

29 15 U.S.C. 78f. 

30 15 U.S.C. 78f(b)(4) and (5). 

31 Securities Exchange Act Release No. 51808 

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

improvement through the use of orders 

that are designed to execute at the 

midpoint of the NBBO. The Exchange 

believes that providing an enhanced 

rebate for executions of Added 

Midpoint Volume is a reasonable means 

by which to incentivize Members to 

provide additional liquidity at the 

midpoint of the NBBO, which in turn 

would increase the attractiveness of the 

Exchange as a destination venue, as 

Members seeking price improvement 

would be more motivated to direct their 

orders to the Exchange because they 

would have a heightened expectation of 

the availability of liquidity at the 

midpoint of the NBBO. The Exchange 

notes that the proposed enhanced rebate 

is comparable to, and competitive with, 

the rebate provided by at least one other 

exchange for executions of nondisplayed orders in securities priced at 

or above $1.00 per share that are pegged 

to the midpoint of the NBBO.23

Increased Standard Fee for Removed 

Volume 

The Exchange also proposes to 

increase the standard fee for executions 

of orders in securities priced at or above 

$1.00 per share that remove liquidity 

from the Exchange (i.e., Removed 

Volume). Currently, the Exchange 

charges a standard fee of $0.0026 per 

share for executions of Removed 

Volume. The Exchange now proposes to 

increase the standard fee charged for 

executions of Removed Volume to 

$0.00265 per share.24 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 proposed 

enhanced rebates for executions of 

Added Displayed Volume for Members 

that qualify for the DLI or the Liquidity 

Provision Tier and executions of Added 

Midpoint Volume, and the Exchange’s 

operations generally, 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 

modest increase to the standard fee, the 

Exchange’s fee for executions of 

Removed Volume remains lower than 

the fee to remove liquidity in securities 

priced at or above $1.00 charged by 

several other exchanges.25

Reduced Standard Rebate for Added 

Displayed Volume 

The Exchange also proposes to reduce 

the standard rebate for executions of 

Added Displayed Volume. Currently, 

the Exchange provides a standard rebate 

of $0.0034 per share for executions of 

Added Displayed Volume. The 

Exchange now proposes to reduce the 

standard rebate for executions of Added 

Displayed Volume to $0.0031 per 

share.26 The Exchange notes that 

executions of displayed orders that add 

liquidity to the Exchange in securities 

priced below $1.00 per share will 

continue to receive the standard rebate 

applicable to executions of such orders 

on the Exchange (i.e., 0.05% of the total 

dollar value of the transaction). 

The purpose of reducing the standard 

rebate for executions of Added 

Displayed Volume is also for business 

and competitive reasons, as the 

Exchange believes the reduction of such 

rebate would decrease the Exchange’s 

expenditures with respect to transaction 

pricing and would also offset some of 

the costs associated with the proposed 

enhanced rebates for executions of 

Added Displayed Volume for Members 

that qualify for the DLI or the Liquidity 

Provision Tier and executions of Added 

Midpoint Volume, and the Exchange’s 

operations generally, 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 is comparable to, and 

competitive with, the standard rebates 

provided by at least one other exchange 

for executions of orders in securities 

priced at or above $1.00 per share that 

add displayed liquidity.27

Lastly, the Exchange proposes to add 

a note to the Fee Schedule specifying 

that to the extent a Member qualifies for 

multiple fees/rebates with respect to a 

particular transaction, the lowest fee/ 

highest rebate shall apply. The 

Exchange notes that charging the fee or 

providing the rebate that is most 

favorable with respect to a particular 

transaction is consistent with the 

pricing practices of other exchanges.28

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,29

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

6(b)(5) of the Act,30 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.’’ 31

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 


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32 See supra note 17. 

33 Id. 

34 Id. 

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

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

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

schedule/bzx/); the Cboe EDGX equities trading fee 

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

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

schedule/edgx/). 

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 that 

the proposal reflects a reasonable and 

competitive pricing structure designed 

to incentivize market participants to 

direct their order flow to the Exchange, 

to enhance market quality in both a 

broad manner and in a targeted manner 

with respect to the DLI Target 

Securities, and to provide price 

improvement through the use of orders 

that are designed to execute at the 

midpoint of the NBBO through the 

provision of enhanced rebates for 

executions of Added Displayed Volume 

for Members that qualify for the DLI or 

the Liquidity Provision Tier and for 

executions of Added Midpoint Volume. 

While the Exchange has proposed 

increasing its standard fee for 

executions of Removed Volume and 

reducing its standard rebate for 

executions of Added Displayed Volume, 

as further discussed below, each of such 

changes represents a modest increase 

(decrease) from the current fee (rebate) 

applicable to such executions. 

As noted above, the proposed DLI is 

intended 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 

the DLI Target Securities, in particular, 

thereby benefitting the Exchange and 

other 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, and committing capital to 

support the execution of orders. 

Additionally, the Exchange believes the 

proposed enhanced rebate for all 

executions of a qualifying Member’s 

Added Displayed Volume will 

simultaneously incentivize such 

Member to direct additional displayed 

liquidity-providing orders to the 

Exchange in a more general manner to 

receive such enhanced rebate. Thus, the 

Exchange believes that the proposed DLI 

will promote price discovery and 

market quality in the DLI Target 

Securities and more generally on the 

Exchange, and, further, that the 

resulting tightened spreads and 

increased displayed liquidity will 

benefit all investors by deepening the 

Exchange’s liquidity pool, offering 

additional flexibility for all investors to 

enjoy cost savings, supporting the 

quality of price discovery, enhancing 

quoting competition across exchanges, 

and promoting market transparency. 

The Exchange believes the proposed 

enhanced rebate of $0.0036 per share 

provided to Members that qualify for the 

DLI for executions of Added Displayed 

Volume is reasonable, in that it does not 

reflect a disproportionate increase above 

the proposed standard rebate of $0.0031 

per share provided to all Members with 

respect to the provision of displayed 

liquidity. The Exchange notes that the 

$0.0005 additional rebate for such 

executions for qualifying Members is a 

competitive proposal given that it is 

higher than the additional rebates 

provided by other exchanges for 

executions of displayed liquidityproviding orders for market participants 

that meet minimum quoting standards 

under similar programs designed to 

enhance market quality.32 In addition, 

the Exchange believes that it is 

reasonable and consistent with an 

equitable allocation of fees to pay a 

higher rebate for executions of Added 

Displayed Volume to Members that 

qualify for the DLI because of the 

additional commitment to market 

quality reflected in the associated 

quoting requirements. Such Members 

benefit all investors by promoting price 

discovery and increasing the depth of 

liquidity available at the NBBO and also 

benefit the Exchange itself by enhancing 

its competitiveness as a market that 

attracts actionable orders. Further, the 

Exchange notes that the proposed DLI 

would apply uniformly to all Members, 

and any Member may choose to qualify 

for the DLI by meeting the associated 

requirements in any month, regardless 

of the volume of transactions that it 

executes on the Exchange. The 

Exchange acknowledges that firms that 

do not post displayed liquidity on the 

Exchange or do so on a smaller scale 

may not have the level of capital 

necessary to support meeting the 

proposed DLI’s requirements, however, 

the Exchange believes that the 

requirements are attainable for many 

market participants who do actively 

quote on exchanges and are reasonably 

related to the enhanced market quality 

that the DLI is designed to promote. 

Additionally, the Exchange notes that 

Members that do not meet the proposed 

DLI’s requirements may still qualify for 

a rebate that is higher than the standard 

rebate for executions of Added 

Displayed Volume through the proposed 

Liquidity Provision Tier, which does 

not require a Member to consistently 

quote at the NBBO across a broad range 

of securities. Accordingly, the Exchange 

believes that it is consistent with an 

equitable allocation of fees and is not 

unfairly discriminatory to pay a higher 

rebate in comparison with the rebate 

paid to other Members for executions of 

displayed liquidity-providing orders in 

recognition of these benefits to the 

Exchange and market participants, 

particularly as the magnitude of the 

additional rebate is not unreasonably 

high and is, instead, reasonably related 

to such enhanced market quality. 

The Exchange also believes that 

including in the proposed DLI 

qualification criteria a quoting 

requirement for certain specified 

securities (i.e., the DLI Target 

Securities), in addition to the more 

general 250 securities requirement, is 

equitable and not unfairly 

discriminatory because the Exchange 

has identified the DLI Target Securities 

as securities in which it would like to 

inject additional quoting competition, 

which the Exchange believes will 

generally act to narrow spreads, increase 

size at the NBBO, and increase liquidity 

depth in such securities, thereby 

increasing the attractiveness of the 

Exchange as a destination venue with 

respect to such securities. Accordingly, 

the Exchange believes that this aspect of 

the proposal is reasonable, equitably 

allocated, and not unfairly 

discriminatory because it is consistent 

with the overall goals of enhancing 

market quality. 

Furthermore, as noted above, the 

proposed DLI is similar in structure and 

purpose to pricing programs in place at 

other exchanges that are designed to 

enhance market quality.33 Specifically, 

these programs, like the proposed DLI, 

provide a higher rebate for executions of 

liquidity-adding displayed orders for 

members that achieve minimum quoting 

standards, including minimum quoting 

at the NBBO in a large number of 

securities, generally, or certain 

designated securities, in particular.34

The Exchange also notes that the 

proposed DLI is not dissimilar from 

volume-based rebates and fees 

(‘‘Volume Tiers’’), like the Liquidity 

Provision Tier proposed in this filing, 

which have been widely adopted by 

exchanges 35 and are equitable and not 


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36 15 U.S.C. 78f(b)(4) and (5). 

37 See supra note 14. 

38 See supra note 35. 

39 See supra note 14. 

40 See supra note 23. 

unfairly discriminatory because they are 

generally open to all members on an 

equal basis and provide higher rebates 

and/or lower fees that are reasonably 

related to the value to an exchange’s 

market quality. Much like Volume Tiers 

are generally designed to incentivize 

higher levels of liquidity provision, the 

proposed DLI is designed to incentivize 

enhanced market quality on the 

Exchange through tighter spreads, 

greater size at the NBBO, and greater 

quoting depth in a large number of 

securities, generally, and in the DLI 

Target Securities, in particular, through 

the provision of an enhanced rebate for 

all executions of a qualifying Member’s 

Added Displayed Volume, where such 

rebate will in turn incentivize higher 

levels of displayed liquidity provision 

in a general manner. Accordingly, the 

Exchange believes that the proposed DLI 

would act to enhance liquidity and 

competition across exchanges in the DLI 

Target Securities and enhance liquidity 

provision in all securities on the 

Exchange more generally by providing a 

rebate reasonably related to such 

enhanced market quality to the benefit 

of all investors, thereby promoting the 

principles discussed in Sections 6(b)(4) 

and 6(b)(5) of the Act.36

The Exchange also believes that 

adding to the Fee Schedule the notes 

describing the calculation 

methodologies and criteria for 

determining whether a Member satisfies 

the requirements to qualify for the DLI, 

as well as the definitions of terms that 

are used in these notes, is reasonable, 

equitable, and non-discriminatory 

because these notes and definitions are 

designed to ensure that the Fee 

Schedule is as clear and easily 

understandable as possible with respect 

to the requirements of the proposed DLI. 

Additionally, the Exchange believes that 

excluding Exchange System Disruption 

Days and the Russell Reconstitution Day 

when determining whether a Member 

qualifies for the proposed DLI during a 

month is reasonable, equitable, and nondiscriminatory because, as explained 

above, the Exchange believes doing so 

would help to avoid penalizing 

Members that might otherwise have met 

the requirements to qualify for the 

proposed DLI due to Exchange system 

disruptions and/or abnormal market 

conditions. The Exchange notes that the 

exclusion of Exchange System 

Disruption Days and the Russell 

Reconstitution Day is consistent with 

the methodologies used by other 

exchanges when calculating certain 

member trading and other volume 

metrics for purposes of determining 

whether members qualify for certain 

pricing incentives.37

As noted above, Volume Tiers, like 

the Liquidity Provision Tier proposed in 

this filing, have been widely adopted by 

exchanges 38 and are equitable and not 

unfairly discriminatory because they are 

open to all members on an equal basis 

and provide rebates 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 

introduction of higher volumes of orders 

into the price and volume discovery 

process. The Exchange believes the 

proposed Liquidity Provision Tier is 

equitable and not unfairly 

discriminatory for these same reasons, 

as it is open to all Members and is 

designed to encourage Members that 

provide liquidity on the Exchange to 

maintain or increase their order flow in 

this regard, thereby contributing to a 

deeper and more liquid market to the 

benefit of all market participants and 

enhancing the attractiveness of the 

Exchange as a trading venue. 

Additionally, the Exchange believes the 

proposed enhanced rebate for 

executions of Added Displayed Volume 

for qualifying Members (i.e., $0.00335 

per share) is reasonable, in that it 

represents only a modest increase above 

the proposed standard rebate for such 

executions (i.e., $0.0031 per share) as 

well as a modest decrease from the 

current standard rebate for such 

executions (i.e., $0.0034 per share). 

Thus, the Exchange believes that it is 

reasonable, consistent with an equitable 

allocation of fees, and not unfairly 

discriminatory to pay such higher rebate 

for executions of Added Displayed 

Volume to Members that qualify for the 

Liquidity Provision Tier in comparison 

with the standard rebate in recognition 

of benefits to the Exchange and market 

participants described above, 

particularly as the magnitude of the 

additional rebate is not unreasonably 

high and is, instead, reasonably related 

to the enhanced market quality it is 

designed to achieve. The Exchange 

further believes that such rebate is 

reasonable as it offers an alternative way 

for Members that do not meet the 

proposed DLI’s requirements to qualify 

for a rebate that is higher than the 

proposed standard rebate for executions 

of Added Displayed Volume that does 

not require such Members to 

consistently quote at the NBBO across a 

broad range of securities. 

Additionally, the Exchange believes 

that excluding Exchange System 

Disruption Days and the Russell 

Reconstitution Day when determining 

whether a Member qualifies for the 

proposed Liquidity Provision Tier 

during a month is reasonable, equitable, 

and non-discriminatory because, as 

explained above, the Exchange believes 

doing so would help to avoid penalizing 

Members that might otherwise have met 

the requirements to qualify for the 

proposed Liquidity Provision Tier due 

to Exchange system disruptions and/or 

abnormal market conditions. The 

Exchange notes that the exclusion of 

Exchange System Disruption Days and 

the Russell Reconstitution Day is 

consistent with the methodologies used 

by other exchanges when calculating 

certain member trading and other 

volume metrics for purposes of 

determining whether members qualify 

for certain pricing incentives, including 

calculations of ADAV for Volume Tiers 

specifically.39

With respect to the proposed 

enhanced rebate for executions of 

Added Midpoint Volume, the Exchange 

believes that providing a rebate for such 

executions that is higher than the 

standard rebate for executions of other 

non-displayed orders in securities 

priced at or above $1.00 per share that 

add liquidity to the Exchange is 

reasonable as the Exchange believes this 

would encourage Members that provide 

liquidity through non-displayed orders 

to do so, to a greater extent, through 

orders designed to execute at the 

midpoint of the NBBO. Because such 

orders provide price improvement to the 

benefit of other market participants, the 

Exchange believes it is reasonable and 

consistent with an equitable allocation 

of fees to provide an enhanced rebate to 

encourage their use, while still 

maintaining an overall pricing structure 

that places even greater emphasis on the 

value of displayed liquidity in 

advancing transparency and price 

discovery. The Exchange further 

believes the proposed enhanced rebate 

is reasonable because, as noted above, it 

is comparable to, and competitive with, 

the rebate provided by at least one other 

exchange for executions of nondisplayed orders in securities priced at 

or above $1.00 per share that are pegged 

to the midpoint of the NBBO.40 The 

Exchange also believes this proposed 

enhanced rebate is not unfairly 

discriminatory as it would apply 

equally to all Members and the elements 

of differentiation between displayed and 

non-displayed liquidity and orders 

designed to execute at the midpoint of 

the NBBO and other non-displayed 


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41 See supra note 25. 

42 See supra note 27. 43 See supra note 28. 44 See supra note 31. 

orders promote the goals of price 

discovery and encouraging market 

participants to provide price 

improvement. 

The Exchange believes that the 

proposed changes to increase the 

standard fee for executions of Removed 

Volume and reduce the standard rebate 

for executions of Added Displayed 

Volume are reasonable, equitable, and 

consistent with the Act because such 

changes are designed to generate 

additional revenue and decrease the 

Exchange’s expenditures with respect to 

transaction pricing to offset some of the 

costs associated with the proposed 

enhanced rebates for executions of 

Added Displayed Volume for Members 

that qualify for the DLI or the Liquidity 

Provision Tier and executions of Added 

Midpoint Volume, and the Exchange’s 

operations generally, in a manner that is 

still consistent with the Exchange’s 

overall pricing philosophy of 

encouraging added displayed liquidity. 

The Exchange also believes the 

proposed increased standard fee for 

executions of Removed Volume is 

reasonable and appropriate because it 

represents a modest increase from the 

current standard fee and, as noted 

above, remains lower than the fee to 

remove liquidity in securities priced at 

or above $1.00 charged by several other 

exchanges.41 Similarly, the Exchange 

believes the proposed reduced standard 

rebate for executions of Added 

Displayed Volume is reasonable and 

appropriate because it represents a 

modest decrease from the current 

standard rebate and, as noted above, 

remains comparable to, and competitive 

with, the standard rebates provided by 

at least one other exchange for 

executions of orders in securities priced 

at or above $1.00 per share that add 

displayed liquidity.42 The Exchange 

further believes that the proposed 

increased standard fee for executions of 

Removed Volume and the proposed 

reduced standard rebate for executions 

of Added Displayed Volume are 

equitably allocated and not unfairly 

discriminatory because they both will 

apply equally to 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 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. 

Finally, the Exchange believes that 

the proposed change to add a note on 

the Fee Schedule specifying that to the 

extent a Member qualifies for multiple 

fees/rebates with respect to a particular 

transaction, the lowest fee/highest 

rebate shall apply is reasonable, 

equitable, and non-discriminatory 

because it applies uniformly to all 

Members and is designed to clarify for 

Members which fee or rebate is 

applicable to their transactions. Thus, 

Exchange believes that this proposed 

change will make the Fee Schedule 

clearer and eliminate potential 

confusion in this regard, thereby 

removing impediments to and 

perfecting the mechanism of a free and 

open market and a national market 

system, and, in general, protecting 

investors and the public interest. 

Further, as noted above, this practice is 

consistent with the pricing practices of 

other exchanges.43

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 

designed to enhance market quality on 

the Exchange in a large number of 

securities, generally, and in the DLI 

Target Securities, in particular, to 

encourage Members to maintain or 

increase their order flow, thereby 

contributing to a deeper and more liquid 

market to the benefit of all market 

participants and enhancing the 

attractiveness of the Exchange as a 

trading venue, and to encourage 

Members to provide price improvement 

through the use of orders that are 

designed to execute at the midpoint of 

the NBBO. In turn, the Exchange 

believes the proposed enhanced rebates 

for executions of Added Displayed 

Volume for Members that qualify for the 

DLI or the Liquidity Provision Tier and 

for executions of Added Midpoint 

Volume would encourage the 

submission of additional order flow to 

the Exchange, particularly in the form of 

Added Displayed Volume and Added 

Midpoint Volume, thereby promoting 

market depth, enhanced execution 

opportunities, price improvement, and 

price discovery to the benefit of all 

Members and market participants. As a 

result, the Exchange believes the 

proposal would enhance its 

competitiveness as a market that attracts 

actionable orders, thereby making it a 

more desirable destination venue for its 

customers. For these reasons, the 

Exchange believes that the proposal 

furthers the Commission’s goal in 

adopting Regulation NMS of fostering 

competition among orders, which 

promotes ‘‘more efficient pricing of 

individual stocks for all types of orders, 

large and small.’’ 44

Intramarket Competition 

The Exchange believes that the 

proposal would incentivize 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, including the DLI 

Target Securities, to maintain or 

increase their order flow, thereby 

contributing to a deeper and more liquid 

market to the benefit of all market 

participants and enhancing the 

attractiveness of the Exchange as a 

trading venue, and to provide price 

improvement through the use of orders 

that are designed to execute at the 

midpoint of the NBBO, which the 

Exchange believes, in turn, would 

continue to encourage participants to 

direct order flow to the Exchange. 

Greater liquidity benefits all Members 

by providing more trading opportunities 

and encourages Members to send orders 

to the Exchange, thereby contributing to 

robust levels of liquidity, which benefits 

all market participants. The opportunity 

to qualify for the DLI, and thus receive 

the proposed enhanced rebate for 

executions of Added Displayed Volume, 

would be available to all Members that 

meet the associated requirements in any 

month, regardless of the volume of 

transactions that it executes on the 

Exchange, and as noted above, the 

Exchange believes that the DLI’s 

requirements are attainable for many 

market participants who actively quote 

on exchanges and are reasonably related 

to the enhanced market quality that the 

DLI is designed to promote. Similarly, 

the opportunity to qualify for the 

Liquidity Provision Tier, and thus also 

receive an enhanced rebate for 

executions of Added Displayed Volume 

(albeit a rebate lower than that provided 

for Members who qualify for the DLI), 

would be available to all Members that 

meet the associated volume requirement 

in any month. The Exchange believes 

the volume requirement of the Liquidity 

Provision Tier is attainable for several 


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32098 Federal Register / Vol. 86, No. 114 / Wednesday, June 16, 2021 / Notices 

45 See supra notes 17, 23, and 35. 

46 See supra note 31. 

47 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 

Cir. 2010) (quoting Securities Exchange Act Release 

No. 59039 (December 2, 2008), 73 FR 74770, 74782– 

83 (December 9, 2008) (SR–NYSE–2006–21)). 

48 15 U.S.C. 78s(b)(3)(A)(ii). 

49 17 CFR 240.19b–4(f)(2). 

market participants who add displayed 

liquidity executed on the Exchange and 

is reasonably related to the enhanced 

market quality that the Liquidity 

Provision Tier is designed to promote. 

Similarly, the proposed enhanced rebate 

for executions of Added Midpoint 

Volume, the proposed increased 

standard fee for executions of Removed 

Volume, and the proposed reduced 

standard rebate for executions of Added 

Displayed Volume would apply equally 

to all Members. As such, 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 

The Exchange operates in a highly 

competitive market. 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, Added Midpoint Volume, and 

Removed Volume, and market 

participants can readily choose to send 

their orders to other exchange and offexchange venues if they deem fee levels 

at those other venues to be more 

favorable. As described above, the 

proposed changes are competitive 

proposals through which the Exchange 

is seeking to encourage certain order 

flow to be sent to the Exchange and to 

promote market quality through pricing 

incentives that are similar in structure 

and purpose to pricing programs in 

place at other exchanges.45 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 incentives to market 

participants that enhance market 

quality. 

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.’’ 46 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’. . . .’’.47 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 48 and Rule 

19b–4(f)(2) 49 thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

MEMX–2021–07 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MEMX–2021–07. 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 such 

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 


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Federal Register / Vol. 86, No. 114 / Wednesday, June 16, 2021 / Notices 32099 

50 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

submissions should refer to File 

Number SR–MEMX–2021–07 and 

should be submitted on or before July 7, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.50

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12593 Filed 6–15–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–095, OMB Control No. 

3235–0084] 

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: 

Rule 17Ac2–1 

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 existing collection of information 

provided for in Rule 17Ac2–1 (17 CFR 

240.17Ac2–1), under the Securities 

Exchange Act of 1934 (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. 

Rule 17Ac2–1, pursuant to Section 

17A(c) of the Exchange Act, generally 

requires transfer agents for whom the 

Commission is the transfer agent’s 

Appropriate Regulatory Agency 

(‘‘ARA’’), to file an application for 

registration with the Commission on 

Form TA–1 and to amend their 

registrations under certain 

circumstances. 

Specifically, Rule 17Ac2–1 requires 

transfer agents to file a Form TA–1 

application for registration with the 

Commission where the Commission is 

their ARA. Such transfer agents must 

also amend their Form TA–1 if the 

existing information on their Form TA– 

1 becomes inaccurate, misleading, or 

incomplete within 60 days following the 

date the information became inaccurate, 

misleading or incomplete. Registration 

filings on Form TA–1 and amendments 

thereto must be filed with the 

Commission electronically, absent an 

exemption, on EDGAR pursuant to 

Regulation S–T (17 CFR 232). 

The Commission annually receives 

approximately 199 filings on Form TA– 

1 from transfer agents required to 

register as such with the Commission. 

Included in this figure are 

approximately 167 amendments made 

annually by transfer agents to their 

Form TA–1 as required by Rule 17Ac2– 

1(c) to address information that has 

become inaccurate, misleading, or 

incomplete and approximately 32 new 

applications by transfer agents for 

registration on Form TA–1 as required 

by Rule 17Ac2–1(a). Based on past 

submissions, the staff estimates that on 

average approximately twelve hours are 

required for initial completion of Form 

TA–1 and that on average one and onehalf hours are required for an 

amendment to Form TA–1 by each such 

firm. Thus, the subtotal burden for new 

applications for registration filed on 

Form TA–1 each year is approximately 

384 hours (12 hours times 32 filers = 

384) and the subtotal burden for 

amendments to Form TA–1 filed each 

year is approximately 251 hours (1.5 

hours times 167 filers = 250.5 rounded 

up to 251). The cumulative total is 

approximately 635 burden hours per 

year (384 hours plus 251 hours). 

Of the approximately 635 hours per 

year associated with Rule 17Ac2–1, the 

Commission staff estimates that (i) sixty 

percent (380.7 hours) are spent by 

compliance staff at an estimated hourly 

wage of $283, for a total of $107,738.10 

per year (380.7 hours × $283 per hour 

= $107,738.10 per year; (ii) forty percent 

(253.8 hours) are spent by attorneys at 

an estimated hourly wage of $380, for a 

total of $96,444 per year (253.8 hours × 

$380 per hour = $96,444 per year); and 

(iii) the total internal cost of compliance 

associated with the Rule is thus 

approximately $204,182.10 per year 

($107,738.10 in compliance staff costs + 

$96,444 in attorney costs = $204,182.10 

per year). 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimates of the burden of the proposed 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information collected; and (d) 

ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

Please direct your written comments 

to: David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Cynthia 

Roscoe, 100 F Street NE, Washington, 

DC 20549, or send an email to: PRA_

Mailbox@sec.gov. 

Dated: June 10, 2021. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–12658 Filed 6–15–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92151; File No. SR– 

CboeEDGA–2021–013] 

Self-Regulatory Organizations; Cboe 

EDGA Exchange, Inc.; Notice of Filing 

of a Proposed Rule Change To 

Introduce a New Data Product To Be 

Known as Short Sale Volume Data 

June 10, 2021. 

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 May 28, 

2021, Cboe EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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 EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) is filing with 

the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed rule change to introduce a 

new data product to be known as Short 

Sale Volume data. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/edga/), 

at the Exchange’s Office of the 


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