[Federal Register Volume 79, Number 245 (Monday, December 22, 2014)]
[Notices]
[Pages 76424-76426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29819]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73850 ; File No. SR-MIAX-2014-63]


Self-Regulatory Organizations: Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by Miami International 
Securities Exchange, LLC To Amend Its Fee Schedule

December 16, 2014.
    Pursuant to the provisions of 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 December 10, 2014, Miami International 
Securities Exchange LLC (``MIAX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') a proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ MIAX initially filed a similar proposal for only SPY options 
on November 25, 2014, and indicated in its filing that it would 
implement the new fee on December 1, 2014. See File No. MIAX-2014-
60. On December 10, 2014, MIAX withdrew that filing and submitted 
this filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend its Fee Schedule.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, and at the Commission's Public Reference Room.

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 Exchange proposes to amend its Fee Schedule to: (i) Adopt a 
transaction fee for options overlying EEM, GLD, IWM, QQQ, and SPY 
executed by non-MIAX Market Makers; and (ii) provide an additional 
incentive for achieving certain Priority Customer Rebate Program volume 
tiers.
    The Exchange proposes to adopt a $0.55 per contract transaction fee 
for non-MIAX Market Makers for options overlying EEM, GLD, IWM, QQQ, 
and SPY. The Exchange notes that the transaction fees for non-MIAX 
Market Makers in all other options classes will not change and thus 
will continue to be charged the same amount for non-Penny Pilot options 
classes and Penny Pilot options classes as they do today.
    The Exchange proposes to offer non-MIAX Market Makers the 
opportunity to reduce transaction fees by $0.02 per contract in 
standard options in EEM, GLD, IWM, QQQ, and SPY in the same manner as 
Penny Pilot options classes and non-Penny Pilot options classes.\4\ 
Specifically, any Member or its affiliates of at least 75% common 
ownership between the firms as reflected on each firm's Form BD, 
Schedule A, that qualifies for Priority Customer Rebate Program volume 
tiers 3, 4, or 5 and is a non-MIAX Market Maker will be assessed $0.53 
per contract for standard options in EEM, GLD, IWM, QQQ, and SPY. The 
Exchange believes that these incentives will encourage non-MIAX Market 
Makers to transact a greater number of orders on the Exchange.
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    \4\ See MIAX Options Fee Schedule, Section (1)(a)(ii).
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    The purpose of the proposed fee change is to increase the 
transaction fee for non-MIAX Market Makers in EEM, GLD, IWM, QQQ, and 
SPY \5\ so that the transaction fees for Market Makers in EEM, GLD, 
IWM, QQQ, and SPY \6\ remain lower as compared to non-MIAX Market 
Makers.\7\ For example, assume both member and non-member market makers 
execute against a Priority Customer order in SPY posted on the 
Exchange's book and executes enough monthly transaction volume to 
qualify for tier 1 of the Market Maker sliding scale: MIAX-MM1 fees = 
$0.54 [(0.17 transaction fee) + (0.25 marketing fee) + (0.12 posted 
liquidity marketing fee)] and Away-MM2 fees = $0.55. Absent this 
proposal, Away-MM2 would be assessed $0.47 per contract which would be 
less than the $0.54 per contract of MIAX-MM1. The Exchange notes that 
maintaining this fee differential encourages market participants to 
become members and register as Market Makers versus otherwise sending 
orders to the Exchange as a non-MIAX Market Maker in order to avoid a 
higher transaction fee.
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    \5\ The Commission notes that the symbols MIAX lists in this 
sentence refer to the respective overlying options class.
    \6\ Id.
    \7\ The Exchange notes that in a companion filing, the Exchange 
recently filed to add an additional marketing fee of $0.12 per 
contract for Priority Customers in EEM, GLD, IWM, QQQ, and SPY 
options posted on the Exchange's Book. See MIAX-2014-62.
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    At this time, the Exchange does not propose a change in the 
corresponding fees for mini options. Mini options are not traded in 
significant volume across

[[Page 76425]]

the industry and, as such, MIAX does not seek to incentivize order 
routers to send such orders to MIAX by extending the new marketing fee 
to posted Priority Customer orders in mini options on SPY and GLD.\8\ 
Thus, the Exchange believes it is unnecessary to increase the non-MIAX 
Market Maker transaction fee in mini options since there is no 
corresponding change in the marketing fees in mini options to 
compensate for.
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    \8\ The Exchange notes that mini options are currently listed on 
SPY, AAPL, GLD, GOOGL, and AMZN. If the Exchange were to extend the 
new Marketing Fee to mini options, since there are no mini options 
on EEM, IWM, and QQQ, the Exchange would not be able to assess an 
additional marketing fee for mini options in such symbols, but 
instead would be limited to assessing the additional fee on SPY and 
GLD. See SR-MIAX-2014-62.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \9\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \10\ in particular, in 
that it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange's proposed transaction fees for non-MIAX Market Makers 
in EEM, GLD, IWM, QQQ, and SPY \11\ are reasonable in order for the net 
transaction fee for non-MIAX Market Makers to remain higher than Market 
Makers in a manner that is designed to encourage market participants to 
become members and register as Market Makers versus otherwise sending 
orders to the Exchange as a non-MIAX Market Maker in order to avoid a 
higher transaction fee. The Exchange's proposal to increase the 
transaction fees for non-MIAX Market Makers in options overlying EEM, 
GLD, IWM, QQQ, and SPY is equitable and not unfairly discriminatory 
because the increase applies equally to all non-MIAX Market Makers. In 
addition, maintaining a higher transaction fee for non-MIAX Market 
Makers versus Market Markers is equitable and not unfairly 
discriminatory because Market Markers on the Exchange have enhanced 
quoting obligations measured in both quantity (% time) and quality 
(minimum bid-ask differentials) that other market participants do not 
have.\12\ In addition, charging non-members higher transaction fees is 
a common practice amongst exchanges because Members are subject to 
other fees and dues associated with their membership to the Exchange 
that do not apply to non-members. The proposed differentiation as 
between non-MIAX Market Makers, Market Makers, and other market 
participants recognizes the differing contributions made to the 
liquidity and trading environment on the Exchange by these market 
participants. Maintaining a lower transaction fee for Market Makers 
should incent market participants and market makers on other exchanges 
to register as Market Makers on the Exchange, which will enhance the 
quality of quoting and increase the volume of contracts traded in 
options listed on MIAX. To the extent that this purpose is achieved, 
all the Exchange's market participants should benefit from the improved 
market liquidity. Enhanced market quality and increased transaction 
volume that results from the increase in Market Maker activity on the 
Exchange will benefit all market participants and improve competition 
on the Exchange.
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    \11\ The Commission notes that the symbols MIAX lists in this 
sentence refer to the respective overlying options class.
    \12\ See MIAX Rules 603, 604, 605.
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    The Exchange's proposal to offer non-MIAX Market Makers the 
opportunity to reduce transaction fees by $0.02 per contract in 
standard options in EEM, GLD, IWM, QQQ, and SPY in the same manner as 
Penny Pilot options classes and non-Penny Pilot options classes, 
provided certain criteria are met, is reasonable because the Exchange 
desires to offer all such market participants an opportunity to lower 
their transaction fees. The Exchange's proposal to offer non-MIAX 
Market Makers the opportunity to reduce transaction fees by $0.02 per 
contract in standard options in EEM, GLD, IWM, QQQ, and SPY, provided 
certain criteria are met, is equitable and not unfairly discriminatory 
because the Exchange will offer all non-MIAX Market Makers in EEM, GLD, 
IWM, QQQ, and SPY \13\ a means to reduce transaction fees by qualifying 
for volume tiers in the Priority Customer Rebate Program. The Exchange 
believes that offering non-MIAX Market Makers that transaction [sic] in 
EEM, GLD, IWM, QQQ, and SPY \14\ the same opportunity as non-MIAX Maker 
Makers in other options classes, to lower transaction fees by 
incentivizing them to transact Priority Customer order flow, in turn 
benefits all market participants.
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    \13\ The Commission notes that the symbols MIAX lists in this 
sentence refer to the respective overlying options class.
    \14\ Id.
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    The Exchange believes that establishing different pricing for EEM, 
GLD, IWM, QQQ, and SPY options and Penny Pilot options is reasonable, 
equitable, and not unfairly discriminatory because EEM, GLD, IWM, and 
SPY options are more liquid options as compared to other Penny Pilot 
options and the Exchange wants to incentivize to encourage market 
participants to become members and register as Market Makers versus 
otherwise sending orders to the Exchange as a non-MIAX Market Maker in 
order to avoid a higher transaction fee in these high volume symbols. 
Finally, the Exchange believes that the proposal to assess a higher 
transaction fee for standard transactions and not mini options is 
reasonable because of the lack of significant volume and limited demand 
in the industry to trade mini options and also because there is no 
corresponding change in the marketing fees in mini options in these 
symbols to compensate for.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The proposal is designed to 
maintain Market Maker transaction fees in EEM, GLD, IWM, QQQ, and SPY 
\15\ that are lower than non-MIAX Market Makers. To the extent that 
there is additional competitive burden on non-MIAX Market Makers, the 
Exchange believes that this is appropriate because charging non-members 
higher transaction fees is a common practice amongst exchanges and 
Members are subject to other fees and dues associated with their 
membership to the Exchange that do not apply to non-members. The 
proposed differentiation as between non-MIAX Market Makers, Market 
Makers, and other market participants recognizes the differing 
contributions made to the liquidity and trading environment on the 
Exchange by these market participants. Maintaining a lower transaction 
fee for Market Makers should incent market participants and market 
makers on other exchanges to register as Market Makers on the Exchange, 
which will enhance the quality of quoting and increase the volume of 
contracts traded in options listed on MIAX. To the extent that this 
purpose is achieved, all the Exchange's market participants should 
benefit from the improved market liquidity. Enhanced market quality and 
increased transaction volume that results from the anticipated increase 
in order flow directed to the Exchange will benefit all market 
participants and improve competition on the Exchange. The Exchange 
notes that it operates in a

[[Page 76426]]

highly competitive market in which market participants can readily 
favor competing venues if they deem fee levels at a particular venue to 
be excessive. In such an environment, the Exchange must continually 
adjust its fees to remain competitive with other exchanges and to 
attract order flow. The Exchange believes that the proposal reflects 
this competitive environment.
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    \15\ Id.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

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.\16\ 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 should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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

    <bullet> Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7002051c155d131f1d1d151e0403300315135e171f06"><span class="__cf_email__" data-cfemail="d4a6a1b8b1f9b7bbb9b9b1baa0a794a7b1b7fab3bba2">[email protected]</span></a>. Please include 
File Number SR-MIAX-2014-63 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549.

All submissions should refer to File Number SR-MIAX-2014-63. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2014-63 and should be 
submitted on or before January 12, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29819 Filed 12-19-14; 8:45 am]
BILLING CODE 8011-01-P


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