38964 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3A ‘‘complex order’’ is any order involving the 

concurrent purchase and/or sale of two or more 

different options in the same underlying security 

(the ‘‘legs’’ or ‘‘components’’ of the complex order), 

for the same account, in a ratio that is equal to or 

greater than one-to-three (.333) and less than or 

equal to three-to-one (3.00) and for the purposes of 

executing a particular investment strategy. Minioptions may only be part of a complex order that 

includes other mini-options. Only those complex 

orders in the classes designated by the Exchange 

and communicated to Members via Regulatory 

Circular with no more than the applicable number 

of legs, as determined by the Exchange on a classby-class basis and communicated to Members via 

Regulatory Circular, are eligible for processing. See 

Exchange Rule 518(a)(5). 

4For a complete description of the trading of 

complex orders on the Exchange, see Exchange Rule 

518. See also, Securities Exchange Act Release No. 

79072 (October 7, 2016), 81 FR 71131 (October 14, 

2016) (SR–MIAX–2016–26). 

5See Securities Exchange Act Release No. 81131 

(July 12, 2017), 82 FR 32900 (July 18, 2017) (SR– 

MIAX–2017–19). (Order Granting Approval of a 

Proposed Rule Change to Amend MIAX Options 

Rules 515, Execution of Orders and Quotes; 515A, 

MIAX Price Improvement Mechanism (‘‘PRIME’’) 

and PRIME Solicitation Mechanism; and 518, 

Complex Orders). 

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– 

Phlx–2017–64 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2017–64. 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 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; 

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–Phlx– 

2017–64 and should be submitted on or 

before September 6, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17278 Filed 8–15–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81372; File No. SR–MIAX– 

2017–40] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Its Fee Schedule in 

Connection With the Adoption of 

Certain New Complex Order Types 

August 10, 2017. 

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 August 7, 2017, Miami International 

Securities Exchange LLC (‘‘MIAX 

Options’’ 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. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Options Fee Schedule 

(the ‘‘Fee Schedule’’) to adopt 

transaction fees and rebates for certain 

new complex order types that have 

become available for trading on the 

Exchange, as described below. The 

Exchange also proposes to clarify an 

existing transaction fee that applies to 

an existing order type, as well as make 

a number of technical corrections to its 

Fee Schedule. 

The Exchange initially filed the 

proposal on July 27, 2017 (SR–MIAX– 

2017–37). That filing was withdrawn 

and replaced with the current filing 

(SR–MIAX–2017–40). 

. [sic] 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.miaxoptions.com/rulefilings, 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 adopt transaction fees 

and rebates for certain new complex 

order types that have become available 

for trading on the Exchange, as 

described below. The Exchange also 

proposes to clarify an existing 

transaction fee that applies to an 

existing order type, as well as make a 

number of technical corrections to the 

Fee Schedule. 

The Exchange began trading complex 

orders 3 in October, 2016.4 As part of its 

effort to continue to build out its 

complex order market segment, the 

Exchange recently adopted rules to 

establish the following three new types 

of complex orders as well as adopted 

new provisions that relate to the 

processing of such complex order types: 

(i) Complex PRIME (‘‘cPRIME’’) Orders, 

(ii) Complex Qualified Contingent Cross 

(‘‘cQCC’’) Orders, and (iii) Complex 

Customer Cross (‘‘cC2C’’) Orders.5 A 

cPRIME Order is a complex order that 

is submitted for participation in a 

cPRIME Auction. A cQCC Order is 

comprised of an originating complex 

order to buy or sell where each leg is at 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38965 

6The Implied Complex MIAX Best Bid or Offer 

(‘‘icMBBO’’) is a calculation that uses the best price 

from the Simple Order Book for each component of 

a complex strategy including displayed and nondisplayed trading interest. For stock-option orders, 

the icMBBO for a complex strategy will be 

calculated using the best price (whether displayed 

or non-displayed) on the Simple Order Book in the 

individual option component(s), and the NBBO in 

the stock component. See Exchange Rule 518(a)(11). 

7The term ‘‘System’’ means the automated 

trading system used by the Exchange for the trading 

of securities. See Exchange Rule 100. 

8See supra note 5. 

9 Id. 

10The term ‘‘cPRIME Participating Quote or 

Order’’ means an unrelated MIAX Market Maker 

complex quote or unrelated MIAX Market Maker 

complex order that is received during the Response 

Time Interval and executed against a cPRIME 

Order. See Section 1(a)(i) of the Fee Schedule, as 

described below. 

11The term ‘‘Member’’ means an individual or 

organization approved to exercise the trading rights 

associated with a Trading Permit. Members are 

deemed ‘‘members’’ under the Exchange Act. See 

Exchange Rule 100. 

12For purposes of the MIAX Options Fee 

Schedule, the term ‘‘Affiliate’’ means (i) an affiliate 

of a Member of at least 75% common ownership 

between the firms as reflected on each firm’s Form 

BD, Schedule A, (‘‘Affiliate’’), or (ii) the Appointed 

Market Maker of an Appointed EEM (or, conversely, 

the Appointed EEM of an Appointed Market 

Maker). See Fee Schedule note 1. 

least 1,000 contracts and that is 

identified as being part of a qualified 

contingent trade, as defined in Rule 516, 

Interpretations and Policies .01, coupled 

with a contra-side complex order or 

orders for the same strategy totaling an 

equal number of contracts. A cC2C 

Order is comprised of one Priority 

Customer complex order to buy and one 

Priority Customer complex order to sell 

the same complex strategy at the same 

initiating price (which must be better 

than (inside) the icMBBO 6 price or the 

best net price of a complex order for the 

strategy) and for the same quantity. 

cPRIME Orders are processed and 

executed in the Exchange’s PRIME 

mechanism, the same mechanism that 

the Exchange uses to process and 

execute simple PRIME orders, pursuant 

to Exchange Rule 515A. cQCC and cC2C 

Orders are processed and executed in 

the same mechanism that the Exchange 

uses to cross simple QCC orders and 

Customer Cross orders, pursuant to 

Exchange Rule 515. 

cPRIME Orders 

Rule 518(b)(7) defines a cPRIME 

Order as a type of complex order that is 

submitted for participation in a cPRIME 

Auction. Trading of cPRIME Orders is 

governed by Rule 515A, Interpretations 

and Policies .12. A cPRIME Auction is 

the price-improvement mechanism of 

the Exchange’s System 7 pursuant to 

which a Member (‘‘Initiating Member’’) 

electronically submits a complex order 

that it represents as agent (an ‘‘Agency 

Order’’) into a cPRIME Auction. The 

Initiating Member, in submitting an 

Agency Order, must be willing to either 

(i) cross the Agency Order at a single 

price (a ‘‘single-price submission’’) 

against principal or solicited interest, or 

(ii) automatically match (‘‘auto-match’’), 

against principal or solicited interest, 

the price and size of responses to a 

Request for Response (‘‘RFR’’) that is 

broadcast to MIAX Options participants 

up to an optional designated limit price. 

The Exchange utilizes the same 

mechanism for the processing and 

execution of both PRIME and cPRIME 

Orders. Accordingly, the Exchange has 

modified Rule 515A so that it also 

permits the execution of cPRIME 

Orders, through changes to Rule 515A(a) 

and the adoption of Interpretations and 

Policies .12 (PRIME for Complex 

Orders).8 Interpretations and Policies 

.12 includes certain processing and 

execution requirements for cPRIME 

Orders that differ from the processing 

and execution requirements under Rule 

515A(a) for simple PRIME Orders.9

The Exchange now proposes to adopt 

new Section 1(a)(vi), MIAX Complex 

Price Improvement Mechanism 

(‘‘cPRIME’’) Fees, on the Fee Schedule 

to establish transaction fees and credits 

for executions in a cPRIME Auction, 

which transaction fees and credits are 

similar to transaction fees and credits 

that the Exchange currently assesses for 

executions in a PRIME Auction: 

Types of market participants 

cPRIME order fee Responder to cPRIME 

auction fee 

cPRIME break-up 

credit 

Per 

contract 

fee for 

agency 

order 

Per 

contract 

fee for 

contra-side 

order 

Per 

contract 

fee for 

penny 

classes 

Per 

contract 

fee for 

non-penny 

classes 

Per 

contract 

credit for 

penny 

classes 

Per 

contract 

credit for 

non-penny 

classes 

Priority Customer ......................................................................... $0.00 $0.00 $0.50 $0.99 $0.25 $0.60 

Public Customer that is Not a Priority Customer ........................ 0.30 0.05 0.50 0.99 0.25 0.60 

MIAX Market Maker ..................................................................... 0.30 0.05 0.50 0.99 0.25 0.60 

Non-MIAX Market Maker ............................................................. 0.30 0.05 0.50 0.99 0.25 0.60 

Non-Member Broker-Dealer ......................................................... 0.30 0.05 0.50 0.99 0.25 0.60 

Firm .............................................................................................. 0.30 0.05 0.50 0.99 0.25 0.60 

This cPRIME Fee table (including the 

amounts therein) is identical to the 

PRIME Fee table (including the amounts 

therein), which is contained in Section 

1(a)(v) of the Fee Schedule. 

The Exchange also proposes to adopt 

certain explanatory text relating to the 

cPRIME Fee table, just as the Exchange 

currently has relating to the PRIME Fee 

table. The text provides that all fees and 

credits are per contract per leg. Also, 

MIAX will assess the Responder to 

cPRIME Auction Fee to: (i) A cPRIME 

AOC Response that executes against a 

cPRIME Order, and (ii) a cPRIME 

Participating Quote or Order 10 that 

executes against a cPRIME Order. MIAX 

will apply the cPRIME Break-up credit 

to the EEM that submitted the cPRIME 

Order for agency contracts that are 

submitted to the cPRIME Auction that 

trade with a cPRIME AOC Response or 

a cPRIME Participating Quote or Order 

that trades with the cPRIME Order. 

MIAX will assess the standard complex 

transaction fees to a cPRIME AOC 

Response if it executes against unrelated 

complex orders. Any Member 11 or its 

Affiliate 12 that qualifies for Priority 

Customer Rebate Program volume tiers 

3 or higher and submits a cPRIME AOC 

Response that is received during the 

Response Time Interval and executed 

against the cPRIME Order, or a cPRIME 

Participating Quote or Order that is 

received during the Response Time 

Interval and executed against the 

cPRIME Order, will be assessed a 

Discounted cPRIME Response Fee of 

$0.46 per contract for standard complex 

order options in Penny Pilot classes. 

Any Member or its Affiliate that 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
38966 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 

13See Exchange Rule 516(i). 

qualifies for Priority Customer Rebate 

Program volume tiers 3 or higher and 

submits a cPRIME AOC Response that is 

received during the Response Time 

Interval and executed against the 

cPRIME Order, or a cPRIME 

Participating Quote or Order that is 

received during the Response Time 

Interval and executed against the 

cPRIME Order, will be assessed a 

Discounted cPRIME Response Fee of 

$0.95 per contract for standard complex 

order options in non-Penny Pilot 

classes. 

The Exchange also proposes to amend 

Section 1(a)(iii), the Priority Customer 

Rebate Program (the ‘‘PCRP’’), of the Fee 

Schedule to establish a tiered per 

contract credit for cPRIME Agency 

Orders. The Exchange proposes to credit 

each Member $0.10 per contract per leg 

for each Priority Customer cPRIME 

Agency Order in each tier. The 

Exchange also proposes to adopt certain 

explanatory text relating to cPRIME 

Agency Orders in PCRP table, just as the 

Exchange currently has relating to other 

order types in the PCRP table. The text 

provides that all fees and rebates are per 

contract per leg. Also for each Priority 

Customer complex order submitted into 

the cPRIME Auction as a cPRIME 

Agency Order, MIAX shall credit each 

member at the separate per contract per 

leg rate for cPRIME Agency Orders. 

However, no rebates will be paid if the 

cPRIME Agency Order executes against 

a Contra-side Order which is also a 

Priority Customer. Finally, unless 

otherwise explicitly set forth therein, 

the remainder of the explanatory text 

relating to the PCRP set forth in that 

Section 1(a)(iii) shall apply to cPRIME 

Agency Orders. The Exchange notes that 

a Member or its Affiliate that qualifies 

for PCRP volume tiers 3 or higher 

receives an additional rebate of $0.02 

per contract for each Priority Customer 

order executed in the PRIME Auction as 

a PRIME Agency Order over a threshold 

of 1,500,000 contracts in a month. 

Finally, for clarification, just as is the 

case today for other types of complex 

orders, if the cPRIME order legs into the 

simple order book, the contracts that 

were entered directly into the simple 

order book will be subject to all 

standard transaction fees, marketing 

fees, rebates, and credits, as set forth in 

the Exchange’s Fee Schedule and as 

applicable to simple orders. Also, the 

Exchange will assess only the cPRIME 

fees contained in Section 1(a)(vi) with 

respect to cPRIME Auctions—the 

Exchange will not also assess the 

complex order fees contained elsewhere 

in Section 1(a). For example, a MIAX 

Market Maker would only be charged 

$0.50 per contract per leg executed for 

responding to a cPRIME Auction, 

pursuant to Section 1(a)(vi); it would 

not also be charged the $0.10 Per 

Contract Surcharge for Removing 

Liquidity Against a Resting Priority 

Customer Complex Order on the 

Strategy Book fee contained in Section 

1(a)(i). Also, if a cPRIME Agency Order 

legs into a simple Market Maker order 

on the simple order book, the Market 

Maker order would not be considered to 

be a Responder for fee purposes. 

As Section 1(a)(vi) will now contain 

the proposed cPRIME fees, the current 

simple QCC Fees table will be 

renumbered as Section 1(a)(vii). There 

are no substantive changes for simple 

QCC fees. 

cQCC Orders 

The Exchange proposes to adopt new 

Section 1(a)(viii), cQCC Fees, to the Fee 

Schedule to establish transaction fees 

and rebates for cQCC Orders, which are 

identical to transaction fees and rebates 

that the Exchange currently charges for 

simple QCC Orders: 

Types of market participants 

cQCC Order 

Per contract 

fee for 

initiator 

Per contract 

fee for 

contra-side 

Per contract 

rebate for 

initiator 

Priority Customer ......................................................................................................................... $0.00 $0.00 $0.10 

Public Customer that is Not a Priority Customer ........................................................................ 0.15 0.15 0.10 

MIAX Market Maker ..................................................................................................................... 0.15 0.15 0.10 

Non-MIAX Market Maker ............................................................................................................. 0.15 0.15 0.10 

Non-Member Broker-Dealer ........................................................................................................ 0.15 0.15 0.10 

Firm .............................................................................................................................................. 0.15 0.15 0.10 

This cQCC Fees table (including the 

amounts therein) is identical to the QCC 

Fees table (including the amounts 

therein), which is contained in Section 

1(a)(vii) of the Fee Schedule. The 

Exchange also proposes to adopt certain 

explanatory text relating to the cQCC 

Fees table, just as the Exchange 

currently has relating to the simple QCC 

Fees table. The text provides that all 

fees and rebates are per contract per leg. 

Also, rebates will be delivered to the 

Member firm that enters the order into 

the MIAX system, but will only be paid 

on the initiating side of the cQCC 

transaction. However, no rebates will be 

paid for cQCC transactions for which 

both the initiator and contra-side orders 

are Priority Customers. A cQCC 

transaction is comprised of an ‘initiating 

complex order’ to buy (sell) where each 

component is at least 1,000 contracts 

that is identified as being part of a 

qualified contingent trade, coupled with 

a contra-side complex order or orders to 

sell (buy) an equal number of contracts. 

C2C and cC2C Orders 

The Exchange proposes to adopt new 

Section 1(a)(ix), C2C and cC2C Fees, to 

the Fee Schedule to clarify and establish 

transaction fees and rebates for C2C 

Orders and cC2C Orders. 

Types of market participants 

C2C and 

cC2C 

order per 

contract fee/ 

rebate 

Priority Customer .................. $0.00 

The Exchange notes that it currently 

offers trading in C2C Orders.13 Because 

C2C Orders are comprised entirely of 

Priority Customer orders, the Exchange 

assesses a $0.00 per contract transaction 

fee and a $0.00 rebate to such orders, 

pursuant to section 1(a)(ii) of the Fee 

Schedule. However, the Exchange 

desires to clarify and make explicit that 

C2C Orders are assessed a $0.00 per 

contract transaction fee and paid a $0.00 

per contract rebate. The Exchange is 

also proposing to assess cC2C Orders a 

$0.00 per contract transaction fee and to 

pay a $0.00 per contract rebate. 

The Exchange also proposes to adopt 

certain explanatory text relating to the 

C2C and cC2C Fees table. The text 

provides that all fees and rebates are per 

contract per leg. Also, a C2C Order is 

comprised of a Priority Customer Order 

to buy and a Priority Customer Order to 

sell at the same price and for the same 

quantity. A cC2C Order is comprised of 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38967 

14 ‘‘Qualifying Member’’ shall mean a Member or 

its Affiliate that qualifies for the Professional Rebate 

Program as described below and achieves a volume 

increase in excess of 0.065% for Professional orders 

transmitted by that Member which are executed 

electronically on the Exchange in all multiply-listed 

option classes for the account(s) of a Professional 

and which qualify for the Professional Rebate 

Program during a particular month relative to the 

applicable Baseline Percentage (as defined under 

the Professional Rebate Program). 

one Priority Customer complex order to 

buy and one Priority Customer complex 

order to sell at the same price and for 

the same quantity. 

Exclusion From Certain Percentage 

Thresholds and Programs and Technical 

Corrections 

The Exchange notes that it currently 

excludes certain simple PRIME, QCC, 

and C2C order types from counting 

towards certain percentage thresholds 

and from participating in certain 

programs under its Fee Schedule. 

Accordingly, with the introduction of 

these new complex order types on the 

Exchange, i.e. cPRIME, cQCC, and cC2C 

Orders, the Exchange is similarly 

proposing to exclude these new order 

types from counting towards those 

certain percentage thresholds and from 

participating in certain programs under 

its Fee Schedule. The Exchange notes 

that C2C Orders are comprised entirely 

of Priority Customer orders, and thus, 

where applicable, are currently 

excluded contracts under Priority 

Customer-to-Priority Customer Orders. 

However, the Exchange desires to clarify 

that C2C Orders are, where applicable, 

excluded by explicitly identifying and 

adding such orders to the list of 

excluded contracts, as described below. 

First, in Section 1(a)(i) of the Fee 

Schedule, Market Maker Transaction 

Fees, Market Maker Sliding Scale, the 

Exchange currently excludes certain 

contracts executed from counting 

towards volume for purposes 

calculating the percentage threshold in 

each of the Market Maker tiers. The Fee 

Schedule currently provides that 

volume thresholds are based on the total 

national Market Maker volume of any 

options classes with traded volume on 

MIAX during the month in simple and 

complex orders (excluding QCC Orders, 

PRIME AOC Responses, and unrelated 

MIAX Market Maker quotes or unrelated 

MIAX Market Maker orders that are 

received during the Response Time 

Interval and executed against the PRIME 

Order (‘‘PRIME Participating Quotes or 

Orders’’)). With the introduction of 

these new complex order types, the 

Exchange now proposes to add the 

following order types to the list of 

excluded contracts: cQCC Orders, 

cPRIME AOC Responses, and unrelated 

MIAX Market Maker complex quotes or 

unrelated MIAX Market Maker complex 

orders that are received during the 

Response Time Interval and executed 

against a cPRIME Order (‘‘cPRIME 

Participating Quote or Order’’). 

Accordingly, as amended, the list of 

excluded contracts shall be QCC and 

cQCC Orders, PRIME and cPRIME AOC 

Responses, and unrelated MIAX Market 

Maker quotes or unrelated MIAX Market 

Maker orders that are received during 

the Response Time Interval and 

executed against the PRIME Order 

(‘‘PRIME Participating Quotes or 

Orders’’) and unrelated MIAX Market 

Maker complex quotes or unrelated 

MIAX Market Maker complex orders 

that are received during the Response 

Time Interval and executed against a 

cPRIME Order (‘‘cPRIME Participating 

Quote or Order’’). 

Second, in Section 1(a)(iii) of the Fee 

Schedule, PCRP, the Exchange currently 

excludes certain contracts executed 

from participation in the PCRP. The Fee 

Schedule currently excludes, in simple 

or complex as applicable, QCC Orders, 

mini-options, Priority Customer-toPriority Customer Orders, PRIME AOC 

Responses, PRIME Contra-side Orders, 

PRIME Orders for which both the 

Agency and Contra-side Order are 

Priority Customers, and executions 

related to contracts that are routed to 

one or more exchanges in connection 

with the Options Order Protection and 

Locked/Crossed Market Plan referenced 

in MIAX Rule 1400. With the 

introduction of these new complex 

order types, the Exchange now proposes 

to add the following contract executions 

to the list of excluded contracts: cQCC 

Orders, C2C and cC2C Orders, cPRIME 

AOC Responses, cPRIME Contra-side 

Orders, and cPRIME Orders for which 

both the Agency and Contra-side Order 

are Priority Customers. Accordingly, as 

amended, the list of excluded contracts 

shall be, in simple or complex as 

applicable, QCC and cQCC Orders, 

mini-options, Priority Customer-toPriority Customer Orders, C2C and cC2C 

Orders, PRIME and cPRIME AOC 

Responses, PRIME and cPRIME Contraside Orders, PRIME and cPRIME Orders 

for which both the Agency and Contraside Order are Priority Customers, and 

executions related to contracts that are 

routed to one or more exchanges in 

connection with the Options Order 

Protection and Locked/Crossed Market 

Plan referenced in MIAX Rule 1400. The 

Exchange notes that C2C Orders are 

comprised entirely of Priority Customer 

orders, and thus are currently excluded 

contracts. However, the Exchange 

desires to clarify that C2C Orders are 

excluded by explicitly identifying and 

adding such orders to the list of 

excluded contracts. The Exchange notes 

that Priority Customer-to-Priority 

Customer Orders are two opposite 

Priority Customer Orders that are paired 

and entered into a PRIME Auction, with 

the Member designating one such 

Priority Customer Order as the PRIME 

Agency Order, which such order 

becomes eligible for price improvement 

in the PRIME Auction. 

Further, the Exchange currently 

excludes certain contracts executed 

from counting towards volume for 

purposes of calculating the percentage 

threshold in each of the PCRP tiers. The 

Fee Schedule currently provides that 

the percentage thresholds are calculated 

based on the percentage of national 

customer volume in multiply-listed 

options classes listed on MIAX entered 

and executed over the course of the 

month (excluding QCC Orders, Priority 

Customer-to-Priority Customer Orders, 

PRIME AOC Responses, PRIME Contraside Orders, PRIME Orders for which 

both the Agency and Contra-side Order 

are Priority Customers). With the 

introduction of these new complex 

order types, the Exchange now proposes 

to add the following order types to the 

list of excluded contracts: cQCC Orders, 

C2C and cC2C Orders, cPRIME AOC 

Responses, cPRIME Contra-side Orders, 

and cPRIME Orders for which both the 

Agency and Contra-side Order are 

Priority Customers. Accordingly, as 

amended, the list of excluded contracts 

shall be QCC and cQCC Orders, Priority 

Customer-to-Priority Customer Orders, 

C2C and cC2C Orders, PRIME and 

cPRIME AOC Responses, PRIME and 

cPRIME Contra-side Orders, and PRIME 

and cPRIME Orders for which both the 

Agency and Contra-side Order are 

Priority Customers. The Exchange notes 

that C2C Orders are comprised entirely 

of Priority Customer orders, and thus 

are currently excluded contracts under 

Priority Customer-to-Priority Customer 

Orders. However, the Exchange desires 

to clarify that C2C Orders are excluded 

by explicitly identifying and adding 

such orders to the list of excluded 

contracts. 

Further, pursuant to the PCRP, the 

Exchange currently credits each 

‘‘Qualifying Member’’ 14 $0.03 per 

contract resulting from each Priority 

Customer order in simple or complex 

order executions which falls within the 

PCRP volume tier 1. However, the 

Exchange also currently excludes 

certain contracts executed from 

receiving the $0.03 per contract credit. 

The Fee Schedule currently excludes 

QCC Orders, mini-options, Priority 

Customer-to-Priority Customer Orders, 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
38968 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 

15The term ‘‘Market Makers’’ refers to Lead 

Market Makers (‘‘LMMs’’), Primary Lead Market 

Makers (‘‘PLMMs’’), and Registered Market Makers 

(‘‘RMMs’’) collectively. See Exchange Rule 100. A 

Directed Order Lead Market Maker (‘‘DLMM’’) and 

Directed Primary Lead Market Maker (‘‘DPLMM’’) is 

a party to a transaction being allocated to the LMM 

or PLMM and is the result of an order that has been 

directed to the LMM or PLMM. See Fee Schedule 

note 2. 

PRIME Agency Orders, PRIME AOC 

Responses, PRIME Contra-side Orders, 

PRIME Orders for which both the 

Agency and Contra-side Order are 

Priority Customers, and executions 

related to contracts that are routed to 

one or more exchanges in connection 

with the Options Order Protection and 

Locked/Crossed Market Plan referenced 

in MIAX Rule 1400. With the 

introduction of these new complex 

order types, the Exchange now proposes 

to add the following contract executions 

to the list of excluded contracts: cQCC 

Orders, C2C and cC2C Orders, cPRIME 

Agency Orders, cPRIME AOC 

Responses, cPRIME Contra-side Orders, 

and cPRIME Orders for which both the 

Agency and Contra-side Order are 

Priority Customers. Accordingly, as 

amended, the list of excluded contracts 

shall be QCC and cQCC Orders, minioptions, Priority Customer-to-Priority 

Customer Orders, C2C and cC2C Orders, 

PRIME and cPRIME Agency Orders, 

PRIME and cPRIME AOC Responses, 

PRIME and cPRIME Contra-side Orders, 

PRIME and cPRIME Orders for which 

both the Agency and Contra-side Order 

are Priority Customers, and executions 

related to contracts that are routed to 

one or more exchanges in connection 

with the Options Order Protection and 

Locked/Crossed Market Plan referenced 

in MIAX Rule 1400. The Exchange notes 

that C2C Orders are comprised entirely 

of Priority Customer orders, and thus 

are currently excluded contracts under 

Priority Customer-to-Priority Customer 

Orders. However, the Exchange desires 

to clarify that C2C Orders are excluded 

by explicitly identifying and adding 

such orders to the list of excluded 

contracts. 

Further, pursuant to the PCRP, the 

Exchange currently credits any Member 

or its Affiliate that qualifies for PCRP 

volume tiers 3 or higher an additional 

$0.02 per contract for each Priority 

Customer order executed in the PRIME 

Auction as a PRIME Agency Order over 

a threshold of 1,500,000 contracts in a 

month. The Exchange notes that the 

additional $0.02 per contract credit will 

not be applicable for cPRIME Agency 

orders, and cPRIME Agency orders do 

not count toward the threshold as 

described below. The Exchange also 

currently excludes certain contracts 

executed from counting towards the 

threshold of 1,500,000 contracts in a 

month. The Fee Schedule currently 

excludes QCC Orders, mini-options, 

Priority Customer-to-Priority Customer 

Orders, PRIME AOC Responses, PRIME 

Contra-side Orders, PRIME Orders for 

which both the Agency and Contra-side 

Order are Priority Customers, and 

executions related to contracts that are 

routed to one or more exchanges in 

connection with the Options Order 

Protection and Locked/Crossed Market 

Plan referenced in MIAX Rule 1400. 

With the introduction of these new 

complex order types, the Exchange now 

proposes to add the following contract 

executions to the list of excluded 

contracts: cQCC Orders, C2C and cC2C 

Orders, cPRIME Agency Orders, cPRIME 

AOC Responses, cPRIME Contra-side 

Orders, and cPRIME Orders for which 

both the Agency and Contra-side Order 

are Priority Customers. Accordingly, as 

amended, the list of excluded contracts 

shall be QCC and cQCC Orders, minioptions, Priority Customer-to-Priority 

Customer Orders, C2C and cC2C Orders, 

cPRIME Agency Orders, PRIME and 

cPRIME AOC Responses, PRIME and 

cPRIME Contra-side Orders, PRIME and 

cPRIME Orders for which both the 

Agency and Contra-side Order are 

Priority Customers, and executions 

related to contracts that are routed to 

one or more exchanges in connection 

with the Options Order Protection and 

Locked/Crossed Market Plan referenced 

in MIAX Rule 1400. The Exchange notes 

that C2C Orders are comprised entirely 

of Priority Customer orders, and thus 

are currently excluded contracts under 

Priority Customer-to-Priority Customer 

Orders. However, the Exchange desires 

to clarify that C2C Orders are excluded 

by explicitly identifying and adding 

such orders to the list of excluded 

contracts. 

Third, in Section 1(a)(iv) of the Fee 

Schedule, Professional Rebate Program 

(‘‘PRP’’), the Exchange currently 

excludes certain contracts executed 

from participation in the PRP. The Fee 

Schedule currently excludes, in simple 

or complex as applicable, mini-options, 

Non-Priority Customer-to-Non-Priority 

Customer Orders, QCC Orders, PRIME 

Orders, PRIME AOC Responses, PRIME 

Contra-side Orders, and executions 

related to contracts that are routed to 

one or more exchanges in connection 

with the Options Order Protection and 

Locked/Crossed Market Plan referenced 

in MIAX Rule 1400 (collectively, for 

purposes of the Professional Rebate 

Program, ‘‘Excluded Contracts’’). With 

the introduction of these new complex 

order types, the Exchange now proposes 

to add the following contract executions 

to the list of Excluded Contracts: cQCC 

Orders, cPRIME Orders, cPRIME AOC 

Responses, and cPRIME Contra-side 

Orders. Accordingly, as amended, the 

list of Excluded Contracts shall be, in 

simple or complex as applicable, minioptions, Non-Priority Customer-to-NonPriority Customer Orders, QCC and 

cQCC Orders, PRIME and cPRIME 

Orders, PRIME and cPRIME AOC 

Responses, PRIME and cPRIME Contraside Orders, and executions related to 

contracts that are routed to one or more 

exchanges in connection with the 

Options Order Protection and Locked/ 

Crossed Market Plan referenced in 

MIAX Rule 1400. 

Fourth, in Section 1(b) of the Fee 

Schedule, Marketing Fee, the Exchange 

currently does not assess the Marketing 

Fee to Market Makers 15 for contracts 

executed as a PRIME Agency Order, 

Contra-side Order, Qualified Contingent 

Cross Order, PRIME Participating Quote 

or Order or a PRIME AOC Response in 

the PRIME Auction, unless it executes 

against an unrelated order. With the 

introduction of these new complex 

order types, the Exchange now proposes 

to add the following executions to that 

list: (i) cPRIME Agency Orders, (ii) 

cQCC Orders, and (iii) cPRIME 

Participating Quotes or Orders or 

cPRIME AOC Responses that trade 

against a cPRIME Agency Order. The 

Exchange also proposes to make a 

number of non-substantive technical 

corrections to the list, as follows: The 

Exchange proposes to abbreviate 

‘‘Qualified Contingent Cross Order’’ to 

‘‘QCC Order’’; the Exchange proposes to 

add clarifying language and to combine 

the PRIME Participating Quote or Order 

and PRIME AOC Response so that it 

reads ‘‘PRIME Participating Quote or 

Order or a PRIME AOC Response trades 

against a PRIME Agency Order’’; and the 

Exchange proposes to delete the text 

‘‘Contra side Order’’ and ‘‘in the PRIME 

Auction; unless, it executes against an 

unrelated order’’, as such text is now 

redundant because it is more explicitly 

covered in the clarified text. 

Accordingly, as amended, the text will 

provide that MIAX will not assess a 

Marketing Fee to Market Makers for 

contracts executed: (i) as a PRIME or 

cPRIME Agency Order, or as a QCC or 

cQCC Order; (ii) when a PRIME 

Participating Quote or Order or a PRIME 

AOC Response trades against a PRIME 

Agency Order; or (iii) when a cPRIME 

Participating Quote or Order or a 

cPRIME AOC Response trades against a 

cPRIME Agency Order. 

Fifth, the Exchange proposes to make 

a number of non-substantive, technical 

corrections to Section 1(a)(v) of the Fee 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38969 

16See Nasdaq ISE, LLC Schedule of Fees, p. 9; 

BOX Options Exchange Fee Schedule, p. 8. 

17 Id. 

18 Id. 

Schedule, MIAX Price Improvement 

Mechanism (‘‘PRIME’’) Fees. The 

Exchange proposes to clarify certain 

explanatory text relating to the PRIME 

Fees table. The first sentence of the text 

currently states that ‘‘MIAX will assess 

the Responder to PRIME Auction Fee to: 

(i) A PRIME AOC Response that 

executes against a PRIME Order, and (ii) 

a PRIME Participating Quote or Order.’’ 

The Exchange proposes to revise the 

text so that, as amended, it states 

‘‘MIAX will assess the Responder to 

PRIME Auction Fee to: (i) A PRIME 

AOC Response that executes against a 

PRIME Order, and (ii) a PRIME 

Participating Quote or Order that 

executes against a PRIME Order.’’ The 

second sentence of the text states 

‘‘MIAX will apply the PRIME Break-up 

credit to the EEM that submitted the 

PRIME Order for agency contracts that 

are submitted to the PRIME Auction that 

trade with a PRIME AOC Response or a 

PRIME Participating Quote or Order.’’ 

The Exchange proposes to revise the 

text so that, as amended, it states 

‘‘MIAX will apply the PRIME Break-up 

credit to the EEM that submitted the 

PRIME Order for agency contracts that 

are submitted to the PRIME Auction that 

trade with a PRIME AOC Response or a 

PRIME Participating Quote or Order that 

trades with the PRIME Order. The third 

sentence of the text states ‘‘The 

applicable fee for PRIME Orders will be 

applied to any contracts for which a 

credit is provided.’’ The Exchange 

proposes to delete this sentence in its 

entirety, as it is redundant and 

potentially ambiguous. The Exchange 

believes that deleting this sentence 

(which reiterates that Exchange charges 

the Responder to PRIME Auction Fee 

[sic] for all contracts on which the 

Exchange pays the PRIME Break-up 

Credit) will eliminate any potential 

confusion among Members and 

investors. The fifth sentence of the text 

states ‘‘MIAX will assess the standard 

transaction fees to a PRIME AOC 

Response if they execute against 

unrelated orders.’’ The Exchange 

proposes to revise the text so that, as 

amended, it states ‘‘MIAX will assess 

the standard transaction fees to a PRIME 

AOC Response if it executes against 

unrelated orders.’’ 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 

in general, and furthers the objectives of 

Section 6(b)(4) of the Act in particular, 

in that it is an equitable allocation of 

reasonable dues, fees, and other charges 

among its members and issuers and 

other persons using its facilities. The 

Exchange also believes the proposal 

furthers the objectives of Section 6(b)(5) 

of the Act in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers and dealers. 

The Exchange believes that the 

proposed fee structure for cPRIME 

Auction transaction fees and rebates is 

reasonable, equitable, and not unfairly 

discriminatory. The proposed fee 

structure is reasonably designed because 

it is intended to incentivize market 

participants to send complex order flow 

to the Exchange in order to participate 

in the price improvement mechanism in 

a manner that enables the Exchange to 

improve its overall competitiveness and 

strengthen its market quality for all 

market participants. cPRIME Auctions 

and the corresponding fees are also 

reasonably designed because the 

proposed fees and rebates are very 

similar to ones the Exchange assesses 

for simple PRIME transactions, and are 

within the range of fees and rebates 

assessed by other exchanges employing 

similar fee structures for complex orders 

submitted and executed in a price 

improvement mechanism.16 Other 

competing exchanges offer different fees 

and rebates for complex agency orders, 

contra-side orders, and responders to an 

auction in a manner similar to the 

proposal.17 Other competing exchanges 

also charge different rates for 

transactions in their complex price 

improvement mechanisms for customers 

versus their non-customers in a manner 

similar to the proposal.18

The fee and rebate structure is 

reasonable, equitable, and not unfairly 

discriminatory because it will apply 

equally amongst all Priority Customer 

orders in each category of cPRIME 

Auction participation and it will also 

apply equally amongst all non-Priority 

Customer orders in each category of 

cPRIME Auction participation. All 

similarly situated orders for Priority 

Customers are subject to the same 

transaction fee and rebate schedule. All 

similarly situated orders for market 

participants that are not Priority 

Customers are subject to the same 

transaction fee and rebate schedule, and 

access to the Exchange is offered on 

terms that are not unfairly 

discriminatory. 

The Exchange believes that is 

equitable and not unfairly 

discriminatory that Priority Customers 

be charged lower fees in cPRIME 

Auctions than other market participants. 

The exchanges in general have 

historically aimed to improve markets 

for investors and develop various 

features within market structure for 

customer benefit. The Exchange assesses 

Priority Customers lower or no 

transactions fees because Priority 

Customer order flow enhances liquidity 

on the Exchange for the benefit of all 

market participants. Priority Customer 

liquidity benefits all market participants 

by providing more trading 

opportunities, which attracts Market 

Makers. An increase in the activity of 

these market participants in turn 

facilitates tighter spreads, which may 

cause an additional corresponding 

increase in order flow from other market 

participants. 

Moreover, the Exchange believes that 

assessing all other market participants 

that are not Priority Customers a higher 

transaction fee than Priority Customers 

for cPRIME Order transactions is 

reasonable, equitable, and not unfairly 

discriminatory because these types of 

market participants are more 

sophisticated and have higher levels of 

order flow activity and system usage. 

This level of trading activity draws on 

a greater amount of system resources 

than that of Priority Customers, and 

thus, generates greater ongoing 

operational costs. Further, the Exchange 

believes that charging all market 

participants that are not Priority 

Customers the same fee for all cPRIME 

transactions is not unfairly 

discriminatory as the fees will apply to 

all these market participants equally. 

The Exchange believes that it is 

reasonable for cPRIME Agency and 

Contra-side Orders to be assessed lower 

fees than those providing responses. 

Contra-side Orders guarantee the 

cPRIME Agency Order, and are subject 

to market risk during the time period 

that the cPRIME Agency Order is 

exposed to other market participants. 

The Exchange believes that the market 

participants entering the Contra-side 

Order acts as a critical role in the 

cPRIME Auction as their willingness to 

guarantee the cPRIME Agency Order is 

the keystone to the cPRIME Agency 

Order gaining the opportunity for price 

improvement. 

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to assess fees to 

responders to the cPRIME Auction and 

credit another participant to provide 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
38970 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 

19See BOX Options Exchange LLC (‘‘BOX’’) Fee 

Schedule, Section I(D) (BOX does not charge Public 

Customers but charges Professional Customers, 

Broker Dealers and Market Makers $0.20 per 

contract on both Agency and Contra Orders); see 

also Chicago Board Options Exchange (‘‘CBOE’’) 

Fee Schedule, ‘‘QCC Rate Table,’’ Page 5 (CBOE 

charges non-Public Customers $0.17 per contract 

and does not charge Public Customers); see also 

NYSE Amex Options Fee Schedule, Section I.F 

(NYSE Amex charges Non-Customers $0.20 per 

contract, Specialists and e-Specialists $0.13 per 

contract, and does not charge Customer and 

Professional Customers). 

20See BOX Fee Schedule, Section I(D)(1); see also 

CBOE Fee Schedule, ‘‘QCC Rate Table,’’ Page 5; see 

also NYSE Amex Options Fee Schedule, Section 

I.F; see also Nasdaq ISE Fee Schedule, Section 

IV(A). 

21See BOX Fee Schedule, Section I(D)(1) (a $0.15 

per contract rebate will be applied to the Agency 

Order where at least one party to the QCC 

transaction is a Non-Public Customer); see also 

CBOE Fee Schedule, ‘‘QCC Rate Table,’’ Page 5 (a 

$0.10 per contract credit will be delivered to the 

TPH Firm that enters the order into CBOE 

Command but will only be paid on the initiating 

side of the QCC transaction); see also NYSE Amex 

Options Fee Schedule, Section I.F (a $0.07 credit is 

applied to Floor Brokers executing 300,000 or fewer 

contracts in a month and a $0.10 credit is applied 

to Floor Brokers executing more than 300,000 

contracts in a month); see also Nasdaq ISE Fee 

Schedule, Section IV(A) (rebates range from $0.01 

to $0.11 per contract). 

incentive for participants to submit 

order flow to cPRIME Auctions. The 

Exchange believes that it is appropriate 

to provide incentives to market 

participants to direct orders to 

participate in cPRIME Auctions. 

Further, the Exchange believes that the 

transaction fees for responding to the 

cPRIME Auction will not deter market 

participants from providing price 

improvement. 

The Exchange believes that it is 

reasonable to assess lower transaction 

and credit rates to penny option classes 

than non-penny option classes. The 

Exchange believes that options which 

trade at these wider spreads merit 

offering greater inducement for market 

participants. In particular, within the 

cPRIME Auction, option classes that 

typically trade in minimum increments 

of $0.05 or $0.10 provide greater 

opportunity for market participants to 

offer price improvement. As such, the 

Exchange believes that the opportunity 

for additional price improvement 

provided by these wider spreads again 

merits offering greater incentive for 

market participants to increase the 

potential price improvement for 

customer orders in these transactions. 

The Exchange believes that the 

proposed PCRP rebates for Priority 

Customer orders submitted into cPRIME 

Auctions are fair, equitable, and not 

unreasonably discriminatory. The rebate 

program is reasonably designed because 

it will incentivize providers of Priority 

Customer order flow to send that 

Priority Customer order flow to the 

Exchange in order to receive a credit in 

a manner that enables the Exchange to 

improve its overall competitiveness and 

strengthen its market quality for all 

market participants. The proposed 

tiered rebate is fair, equitable, and not 

unreasonably discriminatory because it 

will apply equally to all Priority 

Customer orders submitted as a cPRIME 

Agency Order. All similarly situated 

Priority Customer orders are subject to 

the same rebate schedule, and access to 

the Exchange is offered on terms that are 

not unfairly discriminatory. In addition, 

the PCRP is equitable and not unfairly 

discriminatory because, while only 

Priority Customer order flow qualifies 

for the rebate program, an increase in 

Priority Customer order flow will bring 

greater volume and liquidity, which 

benefit all market participants by 

providing more trading opportunities 

and tighter spreads. Market participants 

want to trade with Priority Customer 

order flow. To the extent Priority 

Customer order flow is increased by the 

proposal, market participants will 

increasingly compete for the 

opportunity to trade on the Exchange 

including sending more orders and 

providing narrower and larger-sized 

quotations in the effort to trade with 

such Priority Customer order flow. 

The Exchange believes that excluding 

cQCC Orders, C2C and cC2C Orders, 

cPRIME AOC Responses, cPRIME 

Contra-side Orders, and cPRIME Orders 

for which both the Agency and Contraside Order are Priority Customers from 

the number of options contracts 

executed on the Exchange by any 

Member for purposes of the volume 

thresholds and the PCRP is reasonable, 

equitable, and not unfairly 

discriminatory because participating 

Members could otherwise collect the 

rebates offered and volume thresholds 

by executing excess volume in these 

types of transactions in which no 

transaction fees are charged on the 

Exchange. The Exchange believes that 

the rebate for Priority Customer agency 

orders in the cPRIME Auction is 

reasonably designed to incentivize 

additional customer order flow to the 

cPRIME Auction. 

The Exchange believes the proposed 

transaction fees for cQCC Orders are 

reasonable because the proposed 

amounts are identical to the fees 

assessed for QCC transactions and are in 

line with the amounts assessed at other 

Exchanges for similar transactions.19

Additionally, the proposed fees would 

be assessed to all non-Priority 

Customers alike. 

The Exchange believes the proposed 

rebate for the initiating order side of a 

cQCC transaction is reasonable because 

other competing exchanges also provide 

a rebate on the initiating order side.20

Additionally, the proposed rebate 

amount is within the range of the rebate 

amounts at the other competing 

exchanges.21 The Exchange believes the 

proposed rebate is equitable and not 

unfairly discriminatory because it 

applies to all Members that enter the 

initiating order (except for when both 

the initiator and contra-side orders are 

Priority Customers) and because it is 

intended to incentivize the sending of 

more cQCC Orders to the Exchange. The 

Exchange believes it is reasonable, 

equitable, and not unfairly 

discriminatory to not provide a rebate 

for the initiating order for cQCC 

transactions for which both the initiator 

and the contra-side orders are Priority 

Customers since Priority Customers are 

already incentivized by a reduced fee 

for submitting cQCC Orders. The 

Exchange believes that the proposed 

exclusion of cQCC Orders from the 

Market Maker Sliding Scale, the PCRP, 

and the PRP is reasonable because it 

enables cQCC Orders from all market 

participants to be subject to only the 

specific transaction fees as described 

above that are tailored specifically for 

encouraging market participants to 

transact cQCC Orders on the Exchange. 

The Exchange believes that the 

exclusion is equitable and not unfairly 

discriminatory because it ensures all 

market participants, other than Priority 

Customers, to be subject to the same 

transaction fee for cQCC Orders. While 

Priority Customers will benefit from a 

reduced transaction fee rate for cQCC 

Orders, excluding cQCC Orders from the 

PCRP enables a more equitable and not 

unfairly discriminatory outcome. 

The Exchange believes that adding the 

C2C fee to the Fee Schedule is 

reasonable since it is clarifying the 

Exchange’s existing practice and by 

adding such C2C Order fee to the Fee 

Schedule the Exchange believes that it 

will make it more transparent as to how 

the Exchange assesses such fee and 

avoid any confusion as to how such fee 

is assessed for simple (C2C) and 

complex (cC2C) orders. The Exchange 

believes that the proposed transaction 

fee for cC2C Orders is reasonable 

because the proposed amount is 

identical to the fee assessed for C2C 

transactions, which is currently $0.00. 

The proposed fees would be charged to 

all Priority Customers alike and the 

Exchange believes that assessing a $0.00 

fee to Priority Customers is equitable 

and not unfairly discriminatory. By 

assessing a $0.00 fee to Priority 

Customer orders, the C2C and cC2C 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38971 

22See supra note 16. 

23 15 U.S.C. 78s(b)(3)(A)(ii). 

24 17 CFR 240.19b–4(f)(2). 

transaction fees will not discourage the 

sending of Priority Customer orders. 

The Exchange believes that specifying 

that cPRIME Order and cQCC Order 

executions are not subject to marketing 

fees is reasonable, equitable and not 

unfairly discriminatory. The Exchange 

is seeking to encourage all participants, 

including Market Makers, to send 

cPRIME Orders and to respond to 

cPRIME Auction RFR messages and the 

Exchange believes that collecting 

marketing fees from Market Makers may 

discourage such participation. By 

encouraging as many participants as 

possible to respond, the Exchange 

believes that it will lead to greater 

opportunities for price improvement for 

all cPRIME Agency Orders, not just 

those entered on behalf of customers. 

For these reasons, the Exchange believes 

that excluding cPRIME Orders and 

responses from the marketing fees are 

reasonable, equitable, and not unfairly 

discriminatory. The Exchange believes 

that it is equitable and not unfairly 

discriminatory to continue to charge a 

marketing fee if an unrelated order 

executes in the cPRIME Auction, 

because that unrelated order is not 

subject to the specialized fee structure 

for cPRIME Auctions that is designed to 

incentivize participation. The market 

participant receives the benefit of a 

cPRIME Auction execution and would 

already expect to be charged a 

marketing fee that is no different than 

the fee the market participant was 

expecting to pay trading against 

unrelated orders outside the cPRIME 

Auction. The Exchange further believes 

that not assessing a Marketing Fee for 

contracts executed as a cQCC Order is 

equitable and not unfairly 

discriminatory because such order type 

originated from the same Member, thus 

obviating the purpose of the Marketing 

Fee. 

The Exchange believes that the 

proposed technical changes are 

consistent with Section 6(b)(5) of the 

Act because they are designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanisms of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest. The 

Exchange believes it is appropriate to 

make the proposed technical corrections 

to its Fee Schedule so that Exchange 

Members have a clear and accurate 

understanding of the meaning of the 

Exchange’s Fee Schedule. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

Exchange believes that the proposed 

change will enhance the competiveness 

of the Exchange relative to other 

exchanges that offer their own 

electronic crossing mechanisms and 

offer their own complex crossing order 

types. The Exchange believes that the 

proposed fees and rebates for 

participation in the cPRIME Auction, 

the cQCC fees, and the C2C and cC2C 

fees are not going to have an impact on 

intra-market competition based on the 

total cost for participants to transact in 

such order types versus the cost for 

participants to transact in the other 

order types available for trading on the 

Exchange. As noted above, the Exchange 

believes that the proposed pricing for 

the cPRIME Auction is comparable to 

that of other exchanges offering similar 

electronic price improvement 

mechanisms for complex orders,22 and 

the Exchange believes that, based on 

experience with electronic price 

improvement crossing mechanisms on 

other markets, market participants 

understand that the price-improving 

benefits offered by the cPRIME Auction 

justify the transaction costs associated 

with the cPRIME Auction. To the extent 

that there is a difference between noncPRIME Auction transactions and 

cPRIME Auction transactions, the 

Exchange does not believe this 

difference will cause participants to 

refrain from responding to cPRIME 

Auctions. In addition, the Exchange 

does not believe that the proposed 

transaction fees and credits for these 

new complex crossing order types 

burden competition by creating a 

disparity of transaction fees between 

these order types and other order types. 

The Exchange expects to see robust 

competition within the cPRIME Auction 

to trade against the cPRIME Agency 

Order. The Exchange also expects to see 

robust competition in the trading of 

cQCC Orders and cC2C Orders, as the 

Exchange’s pricing for those order types 

is competitive with the pricing of other 

competing Exchanges. 

The Exchange notes that it operates in 

a 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 to 

the Exchange. The Exchange believes 

that the proposed rule change reflects 

this competitive environment because it 

establishes a fee structure in a manner 

that encourages market participants to 

direct their order flow, to provide 

liquidity, and to attract additional 

transaction volume to the Exchange. 

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,23 and Rule 

19b–4(f)(2) 24 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 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– 

MIAX–2017–40 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–MIAX–2017–40. 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 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
38972 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer that has been admitted 

to membership in the Exchange.’’ See Exchange 

Rule 1.5(n). 

6The Exchange does not propose to amend the 

fees for orders yielding fee code RT in securities 

priced below $1.00. 

7See Exchange Rule 11.11(g)(3). 

8The term ‘‘System’’ is defined as the electronic 

communications and trading facility designated by 

the Board through which securities orders of Users 

are consolidated for ranking, execution and, when 

applicable, routing away. See Exchange Rule 

1.5(cc). 

9The System Routing Table refers to the 

proprietary process for determining the specific 

trading venues to which the System routes orders 

and the order in which it routes them. See 

Exchange Rule 11.11(g). See also Exchange Rule 

11.11(g)(3). 

10By way of background, on May 1, 2017, the 

Exchange previously charged $0.00250 per share for 

orders in securities priced at or above $1.00 that 

yield fee code RT. See Securities Exchange Act 

Release Nos. 80653 (May 11, 2017), 82 FR 22685 

(May 17, 2017) (SR–BatsEDGA–2017–12); and 

79305 (November 14, 2016), 81 FR 81892 

(November 18, 2016) (SR–BatsEDGA–2016–26). 

11 15 U.S.C. 78f. 

12 15 U.S.C. 78f(b)(4). 

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– 

2017–40, and should be submitted on or 

before September 6, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17277 Filed 8–15–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81369; File No. SR– 

BatsEDGA–2017–20] 

Self-Regulatory Organizations; Bats 

EDGA Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change Related to Fees 

for Use on Bats EDGA Exchange, Inc. 

August 10, 2017 

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 July 31, 

2017, Bats EDGA Exchange, Inc. (the 

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

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to 

amend the fee schedule applicable to 

Members 5 and non-Members of the 

Exchange pursuant to EDGA Rules 

15.1(a) and (c). 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at www.bats.com, at the principal office 

of the Exchange, 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

fee schedule to increase the fee for 

orders in securities priced at or above 

$1.00 that yield fee code RT.6 Fee code 

RT is appended to orders that are routed 

using a ROUT 7 routing strategy. ROUT 

is a routing strategy that checks the 

System 8 for available shares and it then 

sent to destinations on the System 

Routing Table.9 The Exchange proposes 

to increase the fee charged for orders 

that yield fee code RT from $0.00250 to 

$0.00260 per share. The Exchange 

proposes to implement this amendment 

to its fee schedule August 1, 2017.10

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the objectives of Section 6 of the Act,11

in general, and furthers the objectives of 

Section 6(b)(4),12 in particular, as it is 

designed to provide for the equitable 

allocation of reasonable dues, fees and 

other charges among its Members and 

other persons using its facilities. 

The Exchange believes that its 

proposal to increase the fee for orders 

that yield fee code RT represents an 

equitable allocation of reasonable dues, 

fees, and other charges among Members 

and other persons using its facilities in 

that they are designed in part to cover 

the costs of routing. While the affected 

Members’ orders will be charged higher 

fees due to the proposal, the increased 

revenue received by the Exchange will 

be used to fund the Exchange generally, 

including the cost of maintaining and 

improving the technology used to 

handle and route orders from the 

Exchange as well as programs that the 

Exchange believes help to attract 

additional liquidity and thus improve 

the depth of liquidity available on the 

Exchange. Accordingly, although the 

cost of routing is increasing, the 

Exchange believes that he increase is 

modest and that higher routing fees will 

benefit Members in other ways. 

Furthermore, the Exchange notes that 

routing through the Exchange is 

voluntary. Lastly, the Exchange also 

believes that the proposed amendment 

is non-discriminatory because it applies 

uniformly to all Members. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

This proposed rule change does not 

impose any burden on competition that 

is not necessary or appropriate in 

furtherance of the purposes of the Act. 

The Exchange does not believe that the 


asabaliauskas on DSKBBXCHB2PROD with NOTICES