Document ID: SEC-2021-1660-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2021-11-26T05:00Z

[Federal Register Volume 86, Number 225 (Friday, November 26, 2021)]
[Notices]
[Pages 67538-67540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25758]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93632; File No. SR-MIAX-2021-57]

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

November 19, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 8, 2021, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 the MIAX Options Fee 
Schedule (the ``Fee Schedule'').
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxoptions.com/rule-filings, 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 the exchange grouping of options 
exchanges within the routing fee table in Section 1)c) of the Fee 
Schedule, Fees for Customer Orders Routed to Another Options Exchange, 
to adjust certain groupings of options exchanges. The Exchange 
initially filed this proposal on October 27, 2021 (SR-MIAX-2021-53) and 
withdrew such filing on November 8, 2021. The Exchange proposes to 
implement the fee change effective November 8, 2021.
    Currently, the Exchange assesses routing fees based upon (i) the 
origin type of the order, (ii) whether or not it is an order for 
standard option classes in the Penny Interval Program \3\ (``Penny 
classes'') or an order for standard option classes which are not in the 
Penny Interval Program (``Non-Penny classes'') (or other explicitly 
identified classes), and (iii) to which away market it is being routed. 
This assessment practice is identical to the routing fees assessment 
practice currently utilized by the Exchange's affiliates, MIAX PEARL, 
LLC (``MIAX Pearl'') and MIAX Emerald, LLC (``MIAX Emerald''). This is 
also similar to the methodology utilized by Cboe BZX Exchange, Inc. 
(``Cboe BZX Options''), a competing options exchange, in assessing 
routing fees. Cboe BZX Options has exchange groupings in its fee 
schedule, similar to those of the Exchange, whereby several exchanges 
are grouped into the same category dependent upon the order's origin 
type and whether it is a Penny or Non-Penny class.\4\
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    \3\ See Securities Exchange Act Release No. 88988 (June 2, 
2020), 85 FR 35153 (June 8, 2020) (SR-MIAX-2020-13) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Exchange Rule 404, Series of Option Contracts Open for 
Trading, Exchange Rule 510, Minimum Price Variations and Minimum 
Trading Increments, and Exchange Rule 516, Order Types Defined, To 
Conform the Rules to Section 3.1 of the Plan for the Purpose of 
Developing and Implementing Procedures Designed To Facilitate the 
Listing and Trading of Standardized Options).
    \4\ See Cboe U.S. Options Fee Schedules, BZX Options, effective 
August 2, 2021, ``Fee Codes and Associated Fees,'' at https://www.cboe.com/us/options/membership/fee_schedule/bzx/.
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    As a result of conducting a periodic review of the current 
transaction fees and rebates charged by away markets, the Exchange has 
determined to amend the exchange groupings of options exchanges within 
the routing fee table to better reflect the associated costs of routing 
customer orders to those options exchanges for execution.\5\ In 
particular, the Exchange proposes to amend the exchange groupings in 
the first row of the table identified as, ``Routed, Priority Customer, 
Penny Program,'' to relocate Nasdaq BX Options from the first row of 
the table to the second, also identified as ``Routed, Priority 
Customer, Penny Program.'' The impact of this proposed change will be 
that the routing fee for Priority Customer orders in the Penny Program 
that are routed to Nasdaq BX Options, will increase from $0.15 to 
$0.65. The purpose of the proposed rule change is to adjust the routing 
fee for certain orders routed to Nasdaq BX Options to reflect the 
associated costs for that routed execution.
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    \5\ Nasdaq BX established a Customer Taker fee of $0.46 in Penny 
Classes and $0.65 in Non-Penny Classes. See Securities Exchange Act 
Release No. 91473 (April 5, 2021), 86 FR 18562 (April 9, 2021) (SR-
BX-2021-009). Nasdaq BX recently increased the Customer Taker fee in 
Non-Penny Classes from $0.65 to $0.79. See Securities Exchange Act 
Release No. 93121 (September 24, 2021), 86 FR 54259 (September 30, 
2021) (SR-BX-2021-040).
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    Next, the Exchange proposes to amend the exchange groupings in the 
third row of the table, identified as ``Routed, Priority Customer, Non-
Penny Program,'' to relocate Nasdaq BX Options from the third row of 
the table to the fourth, also identified as ``Routed, Priority 
Customer, Non-Penny Program.'' The impact of this proposed change will 
be that the routing fee for Priority Customer orders in the Non-

[[Page 67539]]

Penny Program that are routed to Nasdaq BX Options will increase from 
$0.15 to $1.00. The purpose of the proposed rule change is to adjust 
the routing fee for certain orders routed to Nasdaq BX Options to 
reflect the associated costs for that routed execution.
    Next, the Exchange proposes to amend the exchange groupings in the 
sixth row of the table, identified as, ``Routed, Public Customer that 
is not a Priority Customer, Non-Penny Program,'' to relocate Nasdaq ISE 
from the exchange groupings in the sixth row of the table to the 
exchange groupings in the seventh row of the table, also identified as 
``Routed, Public Customer that is not a Priority Customer, Non-Penny 
Program.'' The impact of this proposed change will be that the Exchange 
routing fee for Public Customer orders, that are not Priority Customer 
orders, in the Non-Penny Program that are routed to Nasdaq ISE will 
increase from $1.00 to $1.15. The purpose of the proposed rule change 
is to adjust the routing fee for certain orders routed to Nasdaq ISE to 
reflect the associated costs for that routed execution.
    Finally, the Exchange proposes to amend the exchange groupings in 
the seventh row of the table, identified as ``Routed, Public Customer 
that is not a Priority Customer, Non-Penny Program,'' to relocate 
Nasdaq BX Options, MIAX Pearl, and MIAX Emerald, to the eighth row of 
the table, also identified as ``Routed, Public Customer that is not a 
Priority Customer, Non-Penny Program.'' The impact of this proposed 
change will be that the routing fee for Public Customer orders that are 
not Priority Customer orders in the Non-Penny Program that are routed 
to Nasdaq BX Options, MIAX Pearl, or MIAX Emerald, will increase from 
$1.15 to $1.25. The purpose of the proposed rule change is to adjust 
the routing fee for certain orders routed to Nasdaq BX Options, MIAX 
Pearl, or MIAX Emerald, to reflect the associated costs for that routed 
execution. The Exchange notes that no options exchanges were removed 
from the routing fee table entirely, with the only change being the 
change in categorization.
    Accordingly, with the proposed change, the routing fee table will 
be as follows:

------------------------------------------------------------------------
                       Description                             Fees
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Routed, Priority Customer, Penny Program, to: NYSE                 $0.15
 American, BOX, Cboe, Cboe EDGX Options, Nasdaq MRX,
 Nasdaq PHLX (except SPY)...............................
Routed, Priority Customer, Penny Program, to: NYSE Arca             0.65
 Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq
 ISE, NOM, Nasdaq PHLX (SPY only), MIAX Emerald, MIAX
 Pearl, Nasdaq BX Options...............................
Routed, Priority Customer, Non-Penny Program, to: NYSE              0.15
 American, BOX, Cboe, Cboe EDGX Options, Nasdaq ISE,
 Nasdaq MRX, Nasdaq PHLX................................
Routed, Priority Customer, Non-Penny Program, to: NYSE              1.00
 Arca Options, Cboe BZX Options, Cboe C2, MIAX Pearl,
 MIAX Emerald, Nasdaq GEMX, NOM, Nasdaq BX Options......
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Program, to: NYSE American, NYSE Arca Options,
 Cboe BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX
 Options, Nasdaq GEMX, Nasdaq ISE, Nasdaq MRX, MIAX
 Pearl, MIAX Emerald, NOM, Nasdaq PHLX, Nasdaq BX
 Options................................................
Routed, Public Customer that is not a Priority Customer,            1.00
 Non-Penny Program, to: NYSE American, Cboe, Nasdaq
 PHLX, Cboe EDGX Options................................
Routed, Public Customer that is not a Priority Customer,            1.15
 Non-Penny Program, to: Cboe C2, BOX, NOM, Nasdaq ISE...
Routed, Public Customer that is not a Priority Customer,            1.25
 Non-Penny Program, to: Cboe BZX Options, NYSE Arca
 Options, Nasdaq GEMX, Nasdaq MRX, MIAX Pearl, MIAX
 Emerald, Nasdaq BX Options.............................
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    In determining to amend its routing fees the Exchange took into 
account transaction fees and rebates assessed by the away markets to 
which the Exchange routes orders, as well as the Exchange's clearing 
costs, administrative, regulatory, and technical costs associated with 
routing orders to an away market. The Exchange uses unaffiliated 
routing brokers to route orders to the away markets; the costs 
associated with the use of these services are included in the routing 
fees specified in the Fee Schedule. This routing fees structure is not 
only similar to the Exchange's affiliates, MIAX Pearl and MIAX Emerald, 
but is also comparable to the structure in place at Cboe BZX 
Options,\6\ a competing options exchange. The Exchange's routing fee 
structure approximates the Exchange's costs associated with routing 
orders to away markets. The per-contract transaction fee amount 
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) \7\ to execute that 
corresponding contract(s) at that corresponding exchange. The Exchange 
notes that in determining whether to adjust certain groupings of 
options exchanges in the routing fee table, the Exchange considered the 
transaction fees and rebates assessed by away markets, and determined 
to amend the grouping of exchanges that assess transaction fees for 
routed orders within a similar range. This same logic and structure 
applies to all of the groupings in the routing fee table. By utilizing 
the same structure that is utilized by the Exchange's affiliates, MIAX 
Pearl and MIAX Emerald, the Exchange's Members \8\ will be assessed 
routing fees in a similar manner. The Exchange believes that this 
structure will minimize any confusion as to the method of assessing 
routing fees between the three exchanges. The Exchange notes that its 
affiliates, MIAX Pearl and MIAX Emerald, will file to make the same 
proposed routing fee changes contained herein.
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    \6\ See supra note 4. The Cboe BZX Options fee schedule has 
exchange groupings, whereby several exchanges are grouped into the 
same category, dependent on the order's Origin type and whether it 
is a Penny or Non-Penny class. For example, Cboe BZX Options fee 
code RR covers routed customer orders in Non-Penny classes to NYSE 
Arca, Cboe C2, Nasdaq ISE, Nasdaq Gemini, MIAX Emerald, MIAX Pearl, 
or NOM, with a single fee of $1.25 per contract.
    \7\ This amount is to cover de minimis differences/changes to 
away market fees (i.e., minor increases or decreases) that would not 
necessitate a fee filing by the Exchange to re-categorize the away 
exchange into a different grouping. Routing fees are not intended to 
be a profit center for the Exchange and the Exchange's target 
regarding routing fees and expenses is to be as close as possible to 
net neutral.
    \8\ The 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.
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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

[[Page 67540]]

Section 6(b)(4) of the Act \10\ 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 \11\ 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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed change to the exchange groupings 
of options exchanges within the routing fee table furthers the 
objectives of Section 6(b)(4) of the Act and is reasonable, equitable 
and not unfairly discriminatory because the proposed change will 
continue to apply in the same manner to all Members that are subject to 
routing fees. The Exchange believes the proposed change to the routing 
fee table exchange groupings furthers the objectives of Section 6(b)(5) 
of the Act and is designed to promote just and equitable principles of 
trade and is not unfairly discriminatory because the proposed change 
seeks to recoup costs that are incurred by the Exchange when routing 
customer orders to away markets on behalf of Members and does so in the 
same manner to all Members that are subject to routing fees. The costs 
to the Exchange to route orders to away markets for execution primarily 
includes transaction fees and rebates assessed by the away markets to 
which the Exchange routes orders, in addition to the Exchange's 
clearing costs, administrative, regulatory and technical costs. The 
Exchange believes that the proposed re-categorization of certain 
exchange groupings would enable the Exchange to recover the costs it 
incurs to route orders to Nasdaq BX Options, Nasdaq ISE, MIAX Pearl, 
and MIAX Emerald. The per-contract transaction fee amount associated 
with each grouping approximates the Exchange's all-in cost (plus an 
additional, non-material amount) to execute the corresponding contract 
at the corresponding exchange.

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 Exchange's proposed re-
categorization of certain exchange groupings is intended to enable the 
Exchange to recover the costs it incurs to route orders to away 
markets, particularly Nasdaq BX Options and Nasdaq ISE. The Exchange 
does not believe that this proposal imposes any unnecessary burden on 
competition because it seeks to recoup costs incurred by the Exchange 
when routing orders to away markets on behalf of Members and notes that 
at least one other options exchange has a similar routing fee 
structure.\12\
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    \12\ See supra note 4.
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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 is effective upon filing pursuant to 
Section 19(b)(3)(A) \13\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \14\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \15\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \15\ 15 U.S.C. 78s(b)(2)(B).
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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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MIAX-2021-57 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-MIAX-2021-57. 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-MIAX-2021-57 and should be submitted on 
or before December 17, 2021.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25758 Filed 11-24-21; 8:45 am]
BILLING CODE 8011-01-P