Document ID: SEC-2023-0145-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq MRX, LLC
Posted Date: 2023-02-10T05:00Z

[Federal Register Volume 88, Number 28 (Friday, February 10, 2023)]
[Notices]
[Pages 8975-8980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-02946]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96824; File No. SR-MRX-2023-05]

Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend MRX 
Options 7, Section 6

February 7, 2023.
    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 February 2, 2023, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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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 proposes to amend MRX's Pricing Schedule at Options 7, 
Section 7.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, 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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    MRX proposes to amend its Pricing Schedule at Options 7, Section 6, 
Ports and Other Services, to assess port fees, which were not assessed 
until this year. Prior to this year, MRX did not assess its Members any 
port fees. MRX launched its options market in 2016 \3\ and Members did 
not pay any port fees until 2022.
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    \3\ The Exchange initially filed the proposed pricing changes on 
May 2, 2022 (SR-MRX-2022-04) instituting fees for membership, ports 
and market data. On June 29, 2022, the Exchange withdrew that 
filing, and submitted separate filings for membership, ports and 
market data. SR-MRX-2022-06 replaced the port fees set forth in SR-
MRX-2022-04. On July 1, 2022, SR-MRX-2022-06 was withdrawn and 
replaced with SR-MRX-2022-09. On August 25, 2022, SR-MRX-2022-09 was 
withdrawn and replaced with SR-MRX-2022-12. On October 11, 2022, SR-
MRX-2022-12 was withdrawn and replaced with SR-MRX-2022-20. On 
December 8, 2022, SR-MRX-2022-20 was withdrawn and replaced with SR-
MRX-2022-28. On December 16, 2022, SR-MRX-2022-28 was withdrawn and 
replaced with SR-MRX-2022-29. On February 2, 2023, SR-MRX-2022-29 
was withdrawn and replaced with the instant filing.
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    Newly-opened exchanges often charge no fees for certain services, 
such as ports, in order to attract order flow to an exchange, and later 
amend their fees to charge for those services.\4\ The proposed port 
fees within Options 7, Section 6, Ports and Other Services, are 
described below.
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    \4\ See, e.g., Securities Exchange Act Release No. 90076 
(October 2, 2020), 85 FR 63620 (October 8, 2020) (Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Adopt the 
Initial Fee Schedule and Other Fees for MEMX LLC).
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    The Exchange proposes to amend fees for the following ports within 
Options 7, Section 6: (1) FIX,\5\ (2) SQF; \6\ (3) SQF Purge; \7\ (4) 
OTTO; \8\ (5) CTI; \9\ (6) FIX DROP; \10\ and Disaster Recovery 
Ports.\11\ Currently, no fees are being assessed for these ports.
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    \5\ ``Financial Information eXchange'' or ``FIX'' is an 
interface that allows Members and their Sponsored Customers to 
connect, send, and receive messages related to orders and auction 
orders to the Exchange. Features include the following: (1) 
execution messages; (2) order messages; (3) risk protection triggers 
and cancel notifications; and (4) post trade allocation messages. 
See Supplementary Material .03(a) to Options 3, Section 7.
    \6\ ``Specialized Quote Feed'' or ``SQF'' is an interface that 
allows Market Makers to connect, send, and receive messages related 
to quotes, Immediate-or-Cancel Orders, and auction responses to the 
Exchange. Features include the following: (1) options symbol 
directory messages (e.g., underlying and complex instruments); (2) 
system event messages (e.g., start of trading hours messages and 
start of opening); (3) trading action messages (e.g., halts and 
resumes); (4) execution messages; (5) quote messages; (6) Immediate-
or-Cancel Order messages; (7) risk protection triggers and purge 
notifications; (8) opening imbalance messages; (9) auction 
notifications; and (10) auction responses. The SQF Purge Interface 
only receives and notifies of purge requests from the Market Maker. 
Market Makers may only enter interest into SQF in their assigned 
options series. See Supplementary Material .03(c) to Options 3, 
Section 7.
    \7\ SQF Purge is a specific port for the SQF interface that only 
receives and notifies of purge requests from the Market Maker. 
Dedicated SQF Purge Ports enable Market Makers to seamlessly manage 
their ability to remove their quotes in a swift manner. The SQF 
Purge Port is designed to assist Market Makers in the management of, 
and risk control over, their quotes. Market Makers may utilize a 
purge port to reduce uncertainty and to manage risk by purging all 
quotes in their assigned options series. Of note, Market Makers may 
only enter interest into SQF in their assigned options series. 
Additionally, the SQF Purge Port may be utilized by a Market Maker 
in the event that the Member has a system issue and determines to 
purge its quotes from the order book.
    \8\ ``Ouch to Trade Options'' or ``OTTO'' is an interface that 
allows Members and their Sponsored Customers to connect, send, and 
receive messages related to orders, auction orders, and auction 
responses to the Exchange. Features include the following: (1) 
options symbol directory messages (e.g., underlying and complex 
instruments); (2) system event messages (e.g., start of trading 
hours messages and start of opening); (3) trading action messages 
(e.g., halts and resumes); (4) execution messages; (5) order 
messages; (6) risk protection triggers and cancel notifications; (7) 
auction notifications; (8) auction responses; and (9) post trade 
allocation messages. See Supplementary Material .03(b) to Options 3, 
Section 7. Unlike FIX, which offers routing capability, OTTO does 
not permit routing.
    \9\ Clearing Trade Interface (``CTI'') is a real-time cleared 
trade update message that is sent to a Member after an execution has 
occurred and contains trade details specific to that Member. The 
information includes, among other things, the following: (i) The 
Clearing Member Trade Agreement (``CMTA'') or The Options Clearing 
Corporation (``OCC'') number; (ii) badge or mnemonic; (iii) account 
number; (iv) information which identifies the transaction type 
(e.g., auction type) for billing purposes; and (v) market 
participant capacity. See Options 3, Section 23(b)(1). CTI Ports are 
not required for an MRX Member to meet its regulatory obligations. 
Members receive free daily reports listing trade executions from the 
Exchange.
    \10\ FIX DROP is a real-time order and execution update message 
that is sent to a Member after an order been received/modified or an 
execution has occurred and contains trade details specific to that 
Member. The information includes, among other things, the following: 
(i) executions; (ii) cancellations; (iii) modifications to an 
existing order; and (iv) busts or post-trade corrections. See 
Options 3, Section 23(b)(3). FIX DROP Ports are not required for an 
MRX Member to meet its regulatory obligations. Members receive free 
daily reports listing open orders and trade executions from the 
Exchange.
    \11\ Disaster Recovery ports provide connectivity to the 
Exchange's disaster recovery data center, to be utilized in the 
event the Exchange should failover during a trading day.
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    The Exchange proposes to assess no fee for the first FIX Port 
obtained by an Electronic Access Member \12\ or the first

[[Page 8976]]

SQF Port obtained by a Market Maker.\13\ The Exchange proposes to 
assess a FIX Port Fee of $650 per port, per month, per account number 
\14\ for each subsequent port beyond the first port. The Exchange 
proposes to assess an SQF Port Fee of $1,250 per port, per month for 
each subsequent port beyond the first port.\15\ The Exchange proposes 
to assess an SQF Purge Port Fee of $1,250 per port, per month. The 
Exchange proposes to assess an OTTO Port Fee of $650 per port, per 
month, per account number. The Exchange proposes to assess a CTI Port 
Fee and a FIX Drop Port Fee of $650 per port, per month.
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    \12\ The first FIX Port would be provided to each Electronic 
Access Member. The term ``Electronic Access Member'' or ``EAM'' 
means a Member that is approved to exercise trading privileges 
associated with EAM Rights. See General 1, Section 1(a)(6). Also, 
the first SQF Port would be provided to each Market Maker. The term 
``Market Makers'' refers to ``Competitive Market Makers'' and 
``Primary Market Makers'' collectively. See Options 1, Section 
1(a)(21). The term ``Competitive Market Maker'' means a Member that 
is approved to exercise trading privileges associated with CMM 
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market 
Maker'' means a Member that is approved to exercise trading 
privileges associated with PMM Rights. See Options 1, Section 
1(a)(35).
    \13\ The first SQF Port would be provided to each Market Maker. 
The term ``Market Makers'' refers to ``Competitive Market Makers'' 
and ``Primary Market Makers'' collectively. See Options 1, Section 
1(a)(21). The term ``Competitive Market Maker'' means a Member that 
is approved to exercise trading privileges associated with CMM 
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market 
Maker'' means a Member that is approved to exercise trading 
privileges associated with PMM Rights. See Options 1, Section 
1(a)(35).
    \14\ An ``account number'' shall mean a number assigned to a 
Member. Members may have more than one account number. See Options 
1, Section 1(a)(1). Account numbers are free on MRX.
    \15\ SQF's Port Fees are assessed a higher dollar fee as 
compared to FIX and OTTO ports ($1,250 vs. $650) because the 
Exchange has to maintain options assignments within SQF and manage 
quoting traffic. Market Makers may utilize SQF Ports in their 
assigned options series. Market Maker badges are assigned to 
specific SQF ports to manage the option series in which a Market 
Maker may quote. Additionally, because of quoting obligations 
provided for within Options 2, Section 5, Market Makers are required 
to provide liquidity in their assigned options series which 
generates quote traffic. The Exchange notes because of the higher 
fee, SQF ports are billed per port, per month while FIX and OTTO 
ports are billed per port, per month, per account number. Members 
may have more than one account number.
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    The Exchange proposes to assess no fee for the first FIX Disaster 
Recovery Port obtained by an Electronic Access Member \16\ or the first 
SQF Disaster Recovery Port obtained by a Market Maker.\17\ The Exchange 
proposes to assess each additional FIX Disaster Recovery Port and each 
additional SQF Disaster Recovery Port a fee of $50 per port, per month, 
per account number. Additionally, the Exchange proposes to assess a 
Disaster Recovery Fee for SQF Purge and OTTO Ports of $50 per port, per 
month, per account number. Finally, the Exchange proposes to assess a 
Disaster Recovery Fee for CTI Ports and FIX DROP Ports of $50 per port, 
per month.
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    \16\ The first FIX Port would be provided to each Electronic 
Access Member. The term ``Electronic Access Member'' or ``EAM'' 
means a Member that is approved to exercise trading privileges 
associated with EAM Rights. See General 1, Section 1(a)(6). Also, 
the first SQF Port would be provided to each Market Maker. The term 
``Market Makers'' refers to ``Competitive Market Makers'' and 
``Primary Market Makers'' collectively. See Options 1, Section 
1(a)(21). The term ``Competitive Market Maker'' means a Member that 
is approved to exercise trading privileges associated with CMM 
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market 
Maker'' means a Member that is approved to exercise trading 
privileges associated with PMM Rights. See Options 1, Section 
1(a)(35).
    \17\ The first SQF Port would be provided to each Market Maker. 
The term ``Market Makers'' refers to ``Competitive Market Makers'' 
and ``Primary Market Makers'' collectively. See Options 1, Section 
1(a)(21). The term ``Competitive Market Maker'' means a Member that 
is approved to exercise trading privileges associated with CMM 
Rights. See Options 1, Section 1(a)(12). The term ``Primary Market 
Maker'' means a Member that is approved to exercise trading 
privileges associated with PMM Rights. See Options 1, Section 
1(a)(35).
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    The OTTO Port, CTI Port, FIX Port, FIX Drop Port and all Disaster 
Recovery Ports \18\ are available to all Electronic Access Members, and 
will be subject to a monthly cap of $7,500.
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    \18\ This includes FIX, SQF, SQF Purge, OTTO, CTI and FIX Drop 
Disaster Recovery Ports.
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    The SQF Port and the SQF Purge Port are available to all Market 
Makers, and will be subject to a monthly cap of $17,500.\19\
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    \19\ Only Market Makers may quote on MRX. The Exchange is 
proposing non-substantive technical amendments to add commas within 
the ``Production'' column of the proposed rule text to separate 
terms.
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    The Exchange is not amending the Nasdaq MRX Depth of Market, Nasdaq 
MRX Order Feed, Nasdaq MRX Top Quote Feed, Nasdaq MRX Trades Feed, or 
Nasdaq MRX Spread Feed Ports; all of these aforementioned ports will 
continue to be assessed no fees. Additionally, as is the case today, 
the Disaster Recovery Ports for the Nasdaq MRX Depth of Market, Nasdaq 
MRX Order Feed, Nasdaq MRX Top Quote Feed, Nasdaq MRX Trades Feed and 
Nasdaq MRX Spread Feed Ports will not be assessed a fee.
Order and Quote Entry Protocols
    Only one FIX order protocol is required for an MRX Member to submit 
orders into MRX and to meet its regulatory requirements.\20\ The 
Exchange will provide each Electronic Access Member \21\ the first FIX 
Port at no cost to submit orders into MRX. Only one account number is 
necessary to transact an options business on MRX and account numbers 
are available to Members at no cost.
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    \20\ MRX Members have trade-through requirements under 
Regulation NMS as well as broker-dealers' best execution 
obligations.
    \21\ A Market Maker who is also an Electronic Access Member 
would receive both one free FIX Port and one free SQF Port.
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    Only one SQF quote protocol is required for an MRX Market Maker to 
submit quotes into MRX and to meet its regulatory requirements.\22\ The 
Exchange will provide each Market Maker the first SQF Port at no cost 
to submit quotes into MRX. A quoting protocol, such as SQF, is only 
required to the extent an MRX Member has been appointed as a Market 
Maker in an options series pursuant to Options 2, Section 1.
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    \22\ MRX Market Makers have intra-day quoting requirements. See 
Options 2, Section 5(e). Additionally, PMMs must submit a Valid 
Width Quote each day to open their assigned options series. See 
Options 3, Section 8(c)(1) and 8(c)(3).
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    Only MRX Members may utilize ports on MRX. Any market participant 
that sends orders to a Member would not need to utilize a port. The 
Member can send all orders, proprietary and agency, through one port to 
MRX. Members may elect to obtain multiple account numbers to organize 
their business, however only one account number and one port for orders 
and one port for quotes is necessary for a Member to trade on MRX. All 
other ports offered by MRX are not required for an MRX Member to meet 
its regulatory obligations.
    MRX also offers an OTTO protocol.\23\ MRX Members utilizing the 
first FIX Port offered at no cost do not need to purchase an OTTO Port 
to meet their regulatory obligations.
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    \23\ See note 8, supra.
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    Further, while only one FIX protocol is necessary to submit orders 
into MRX, Members may choose to purchase a greater number of order 
entry ports, depending on that Member's business model.\24\ To the 
extent that Electronic Access Members chose to utilize more than one 
FIX Port, the Electronic Access Member would be assessed $650 per port, 
per month, per account number for each subsequent port beyond the first 
port. To the extent that Market Makers chose to utilize more than one 
SQF Port, the Market Maker would be assessed $1,250 per port, per month 
for each subsequent port beyond the first port. Additionally, to the 
extent a Member expended more than $7,500 for FIX Ports or more than 
$17,500 for SQF Ports, the Exchange would not charge an MRX Member for 
additional FIX or SQF Ports, respectively, beyond the cap.
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    \24\ For example, a Member may desire to utilize multiple FIX or 
OTTO Ports for accounting purposes, to measure performance, for 
regulatory reasons or other determinations that are specific to that 
Member.

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[[Page 8977]]

Other Protocols
    The Exchange's proposal to offer an SQF Purge Port \25\ for $1,250 
per port, per month is not required for an MRX Member to meet its 
regulatory obligations.
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    \25\ See note 7, supra.
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Disaster Recovery Ports
    With respect to Disaster Recovery Ports, the Exchange proposes to 
assess no fee for the first FIX Disaster Recovery Port obtained by an 
Electronic Access Member or the first SQF Disaster Recovery Port 
obtained by a Market Maker. The Exchange proposes to assess no fees for 
these ports to provide Members with continuous access to MRX in the 
event of a failover at no cost. Electronic Access Members only require 
one FIX Disaster Recovery Port to submit orders in the event of a 
failover. Market Makers only require one SQF Disaster Recovery Port to 
submit quotes in the event of a failover.\26\ Electronic Access Members 
may elect to purchase additional FIX Disaster Recovery Ports for $50 
per port, per month, per account number. Market Makers may elect to 
purchase additional SQF Disaster Recovery Ports for $50 per port, per 
month, per account number. The additional FIX and SQF Disaster Recovery 
Ports are not necessary to connect to the Exchange in the event of a 
failover because the Exchange has provided Members with a FIX Disaster 
Recovery Port and an SQF Disaster Recovery Port at no cost. Additional 
FIX and SQF Disaster Recovery Ports are not necessary for an MRX Member 
to meet its regulatory obligations.\27\
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    \26\ The Exchange proposes to provide each Electronic Access 
Member the first FIX Disaster Recovery Port at no cost. The Exchange 
also proposes to provide each Market Maker the first SQF Disaster 
Recovery Port at no cost.
    \27\ See MRX General 2, Section 12(b) (this provision implements 
Rule 1000 of Regulation SCI).
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    The Exchange's proposal to offer Disaster Recovery Ports for SQF 
Purge Ports and OTTO Ports for $50 per port, per month, per account 
number and Disaster Recovery Ports for CTI Ports and FIX DROP Ports for 
$50 per port, per month is not required for an MRX Member to meet its 
regulatory obligations. The proposed Disaster Recovery Port fees are 
intended to encourage Members to be efficient when purchasing Disaster 
Recovery Ports.
    Finally, in the event that an MRX Member elects to subscribe to 
multiple ports, the Exchange offers a monthly cap beyond which a Member 
would be assessed no additional port fees in a given month. As noted 
above, the SQF Port and the SQF Purge Port are subject to a monthly cap 
of $17,500 and the OTTO Port, CTI Port, FIX Port, FIX Drop Port and all 
Disaster Recovery Ports are subject to a monthly cap of $7,500.
    These different protocols are not all necessary to conduct business 
on MRX; a Member may choose among protocols based on their business 
workflow. The Exchange's proposal to offer the first FIX and SQF Port 
at no cost as well as the first FIX and SQF Disaster Recovery Ports at 
no cost would allow MRX Members to submit orders and quotes into MRX at 
no cost while meeting their regulatory obligations.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\28\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\29\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \28\ See 15 U.S.C. 78f(b).
    \29\ See 15 U.S.C. 78f(b)(4) and (5).
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    MRX proposes to amend its Pricing Schedule at Options 7, Section 6, 
Ports and Other Services, to assess port fees, which were not assessed 
until this year. Prior to this year, MRX did not assess its Members any 
port fees. MRX launched its options market in 2016 \30\ and Members did 
not pay any port fees until 2022. Of the 16 operating options 
exchanges, MRX has the smallest market share at 1.37% as of November 
2022.
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    \30\ The Exchange initially filed the proposed pricing changes 
on May 2, 2022 (SR-MRX-2022-04) instituting fees for membership, 
ports and market data. On June 29, 2022, the Exchange withdrew that 
filing, and submitted separate filings for membership, ports and 
market data. SR-MRX-2022-06 replaced the port fees set forth in SR-
MRX-2022-04. On July 1, 2022, SR-MRX-2022-06 was withdrawn and 
replaced with SR-MRX-2022-09. On August 25, 2022, SR-MRX-2022-09 was 
withdrawn and replaced with SR-MRX-2022-12. On October 11, 2022, SR-
MRX-2022-12 was withdrawn and replaced with SR-MRX-2022-20. On 
December 8, 2022, SR-MRX-2022-20 was withdrawn and replaced with SR-
MRX-2022-28. The instant filing replaces SR-MRX-2022-28 which was 
withdrawn on December 16, 2022.
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    The Exchange notes that, as of May 2, 2022, one MRX Member, who was 
also a Market Maker, cancelled all of their ports (1 SQF Port and 1 
OTTO Port) to avoid being assessed any MRX port fees.\31\ As of July 1, 
2022, the Exchange did not assess MRX Members for their first SQF Port 
or FIX Port. Further, in October 2022, an additional MRX Member, who is 
also a Market Maker, cancelled 3 SQF Ports.\32\
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    \31\ MRX originally filed to assess a fee for all FIX Ports.
    \32\ This Member informed the Exchange that they elected to 
utilize less ports in response to the current port pricing. This 
Member had a total of 8 SQF Ports at the time they instructed MRX to 
cancel 3 of those ports.
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Proposed Port Fees Are Reasonable, Equitable and Not Unfairly 
Discriminatory
    Only one FIX order protocol is required for an MRX Member to submit 
orders into MRX and to meet its regulatory requirements \33\ at no cost 
while meeting its regulatory requirements. The Exchange will provide 
each Electronic Access Member the first FIX Port at no cost to submit 
orders into MRX. Only one account number is necessary to transact an 
options business on MRX and account numbers are available to Members at 
no cost.
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    \33\ MRX Members have trade-through requirements under 
Regulation NMS as well as broker-dealers' best execution 
obligations. See Rule 611 of Regulation NMS; 17 CFR 242.611 and 
FINRA Rule 5310.
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    Only one SQF quote protocol is required for an MRX Market Maker to 
submit quotes into MRX and to meet its regulatory requirements \34\ at 
no cost while meeting its regulatory requirements. The Exchange will 
provide each Market Maker the first SQF Port at no cost to submit 
quotes into MRX. A quoting protocol, such as SQF, is only required to 
the extent an MRX Member has been appointed as a Market Maker in an 
options series pursuant to Options 2, Section 1.
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    \34\ MRX Members have trade-through requirements under 
Regulation NMS as well as broker-dealers' best execution 
obligations. MRX Market Makers have intra-day quoting requirements. 
See Options 2, Section 5(e). PMMs must submit a Valid Width Quote 
each day to open their assigned options series. See Options 3, 
Section 8(c)(1) and 8(c)(3).
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    The Exchange proposes to offer each Electronic Access Member the 
first FIX Port and first FIX Disaster Recovery Port at no cost and it 
proposes to offer each Market Maker the first SQF Port and first SQF 
Disaster Recovery Port at no cost to meet their regulatory 
requirements. As noted above, Members may freely choose to rely on one 
or many ports, depending on their business model.
    The Exchange's proposal is reasonable, equitable and not unfairly 
discriminatory as MRX is providing MRX Electronic Access Members the 
first FIX Port to submit orders and MRX Market Makers the first SQF 
Port to submit quotes to MRX, at no cost, in addition to providing the 
first FIX Disaster Recovery Port and the first SQF Disaster Recovery 
Port at no cost. These

[[Page 8978]]

ports, which are offered at no cost, would allow an MRX Member to meet 
its regulatory requirements. All other ports offered by MRX are not 
required for an MRX Member to meet its regulatory obligations. 
Therefore, for the foregoing reasons, it is reasonable to assess no fee 
for the first FIX Port obtained by an Electronic Access Member or the 
first SQF Port obtained by a Market Maker as an MRX Member is able to 
meet its regulatory requirements with these ports.
    Further it is equitable and not unfairly discriminatory to assess 
no fee for the first FIX Port to Electronic Access Members as all 
Electronic Access Members would be entitled to the first FIX Port at no 
cost. Also, it is equitable and not unfairly discriminatory to assess 
no fee for the first SQF Port to Market Makers as all Market Makers 
would be entitled to the first SQF Port at no cost. With this proposal, 
MRX Members may organize their business in such a way as to submit 
orders and/or quotes continuously to MRX at no cost.
    The Exchange's proposal to assess Members $650 per port, per month, 
per account number for FIX Ports beyond the first port and $1,250 per 
port, per month for SQF Ports beyond the first port is reasonable 
because these ports are not required for a member to meet its 
regulatory requirements. Members only require one FIX Port to submit 
orders to MRX and one SQF Port to submit quotes to MRX. Members 
electing to subscribe to more than one FIX or SQF Port are choosing the 
additional ports to accommodate their business model. Additionally, to 
the extent a Member expended more than $7,500 for FIX Ports or more 
than $17,500 for SQF Ports, the Exchange would not charge an MRX Member 
for additional FIX or SQF Ports beyond the cap. The fees for the 
proposed additional FIX and SQF Ports are equitable and not unfairly 
discriminatory because any Member may elect to subscribe to additional 
ports. Electronic Access Members would be subject to the same fees for 
FIX Ports and Market Makers would be subject to the same fees for SQF 
Ports. Unlike other market participants, Market Makers are required to 
provide continuous two-sided quotes on a daily basis,\35\ and are 
subject to various obligations associated with providing liquidity.\36\ 
Also, as noted herein, account numbers are available on MRX at no cost.
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    \35\ See MRX Options 2, Section 5.
    \36\ See MRX Options 2, Section 4.
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    The Exchange's proposal to assess $650 per port, per month, per 
account number for an OTTO Port is reasonable because OTTO is not 
required for a member to meet its regulatory requirements. The Exchange 
is offering the first FIX Port at no cost to submit orders to MRX. In 
addition to the FIX Port, all Members may elect to purchase OTTO to 
submit orders to MRX. MRX Members utilizing the FIX Port, which is 
offered at no cost, do not need to utilize OTTO.
    The Exchange's proposal to offer an SQF Purge Port for $1,250 per 
port, per month is reasonable because this port is not required for a 
member to meet its regulatory requirements. The SQF Purge Port is 
designed to assist Market Makers in the management of, and risk control 
over, their quotes. Market Makers may utilize a purge port to reduce 
uncertainty and to manage risk by purging all quotes in their assigned 
options series. The proposed SQF Purge Port is equitable and not 
unfairly discriminatory because any Market Maker may elect to purchase 
an SQF Purge Port and would be subject to the same fee.
    The Exchange's proposal to assess $650 per port, per month for CTI 
Ports and FIX DROP Ports is reasonable because these ports are not 
required for a member to meet its regulatory requirements. The proposed 
CTI and FIX DROP Ports are equitable and not unfairly discriminatory 
because any Member may elect to purchase an additional CTI Port or FIX 
DROP Port and would be subject to the same fee.
    The Exchange's proposal to assess no fee for the first FIX Disaster 
Recovery Port or the first SQF Disaster Recovery Port is reasonable 
because it will provide Members with continuous access to MRX in the 
event of a failover, at no cost and allow MRX Members to meet their 
regulatory obligations. Further it is equitable and not unfairly 
discriminatory to assess no fee for the first FIX Disaster Recovery 
Port to Electronic Access Members as all Electronic Access Members 
would be entitled to the first FIX Disaster Recovery Port at no cost. 
Also, it is equitable and not unfairly discriminatory to assess no fee 
for the first SQF Disaster Recovery Port to Market Makers as all Market 
Makers would be entitled to the first SQF Disaster Recovery Port at no 
cost.
    The Exchange's proposal to assess Members $50 per port, per month, 
per account number for additional FIX Disaster Recovery Ports beyond 
the first port offered at no cost and $50 per port, per month, per 
account number for additional SQF Disaster Recovery Ports beyond the 
first port at no cost is reasonable because these additional ports are 
not required for MRX Members to meet their regulatory obligations. 
Members only require one FIX Disaster Recovery Port to submit orders to 
MRX in the event of a failover and one SQF Disaster Recovery Port to 
submit quotes to MRX in the event of a failover. Additionally, to the 
extent a Member expended more than $7,500 for Disaster Recovery Ports, 
the Exchange would not charge an MRX Member for additional Disaster 
Recovery Ports beyond the cap. The fees for the proposed additional FIX 
and SQF Disaster Recovery Ports are equitable and not unfairly 
discriminatory because any Member may elect additional ports and would 
be subject to the same fees.
    The Exchange's proposal to offer Disaster Recovery Ports for SQF 
Purge Ports, and OTTO Ports at $50 per port, per month, per account 
number and CTI Ports, and FIX DROP Ports for $50 per port, per month is 
reasonable because these additional ports are not required for MRX 
Members to meet their regulatory obligations. The proposed Disaster 
Recovery Port fees are intended to encourage Members to be efficient 
when purchasing Disaster Recovery Ports. The proposed Disaster Recovery 
Ports are equitable and not unfairly discriminatory because any Member 
may elect to purchase an additional Disaster Recovery Port and would be 
subject to the same fee, depending on the port.
    Finally, in the event that an MRX Member elects to subscribe to 
multiple ports, the Exchange offers a monthly cap beyond which a Member 
would be assessed no additional fees for month. As noted above, the SQF 
Port and the SQF Purge Port are subject to a monthly cap of $17,500 and 
the OTTO Port, CTI Port, FIX Port, FIX Drop Port and all Disaster 
Recovery Ports are subject to a monthly cap of $7,500. These caps are 
reasonable because they allow Members to limit their fees beyond a 
certain level if they elect to purchase multiple ports in a given 
month. The caps are also equitable and not unfairly discriminatory 
because any Member will be subject to the cap, provided they exceeded 
the appropriate dollar amount in a given month.
    The proposed port fees are comparable, and in some cases lower than 
fees assessed today by other options exchanges. The proposed port fees 
are similar to fees assessed today by GEMX, except that GEMX does not 
offer the first FIX and SQF Port at no cost, nor does GEMX offer the 
first FIX Disaster Recovery Port or the first SQF

[[Page 8979]]

Disaster Recovery Port at no cost.\37\ By way of comparison, ISE 
assessed fees for ports \38\ in 2019 while offering the same suite of 
functionality as MRX, with a limited exception.\39\ Cboe \40\ port fees 
are within the range of the proposed fees. While Cboe does not offer 
the first order and quote entry port at no cost or Disaster Recovery 
Ports at no cost, it tiers its BOE and FIX Logical ports and each 
subsequent port fee is lower than MRX's port fees. MRX's FIX DROP Port 
Fee is lower than Cboe's DROP Logical Port Fee.\41\ Cboe does not cap 
its ports as MRX has proposed herein. BOX port fees \42\ are within the 
range of the proposed fees. While BOX does not offer the first order 
and quote entry port at no cost or Disaster Recovery Ports at no cost, 
it tiers its FIX and SAIL port fees and each subsequent port fee is 
lower than MRX's port fees, although the fees are not capped as 
proposed herein. MRX's FIX DROP Port Fee is higher than BOX's Drop Copy 
Port Fee.\43\ MIAX port fees \44\ are within the range of the proposed 
fees. MRX MEI Port users are allocated two (2) Full Service MEI Ports 
and two (2) Limited Service MEI Ports per matching engine to which they 
connect.\45\ A MIAX Market Maker may request and be allocated two (2) 
Purge Ports per matching engine to which it connects via a Full Service 
MEI Port.\46\ MIAX assesses a Real-Time Clearing Trade Drop Port Fee of 
$0.0030 per executed contract side per month.\47\ MIAX assesses a FIX 
Drop Copy Port fee of $500 per month \48\ which is lower than MRX's 
proposed fee. NYSE Arca port fees \49\ are within the range of the 
proposed fees. For each order/quote entry port utilized, NYSE Arca 
Market Makers may utilize, free of charge, one port dedicated to quote 
cancellation or ``quote takedown,'' which port(s) will not be included 
in the count of order/quote entry ports utilized.\50\ NYSE Arca 
assesses a DROP Copy Port fee of $500 per port per month \51\ which is 
lower than MRX's proposed fee.\52\
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    \37\ See GEMX Options 7, Section 6.C. (Ports and Other 
Services).
    \38\ Since 2019, ISE has assessed the following port fees: a FIX 
Port Fee of $300 per port, per month, per mnemonic, an SQF Port Fee 
and SQF Purge Port Fee of $1,100 per port, per month, an OTTO Port 
Fee of $400 per port, per month, per mnemonic with a monthly cap of 
$4,000, a CTI Port Fee and FIX DROP Port Fee of $500 per port, per 
month, per mnemonic. See Securities Exchange Act Release No. 82568 
(January 23, 2018), 83 FR 4086 (January 29, 2018) (SR-ISE-2018-07) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change To Assess Fees for OTTO Port, CTI Port, FIX Port, FIX Drop 
Port and Disaster Recovery Port Connectivity). Of note, ISE assessed 
port fees prior to 2019 as well.
    \39\ See note 41, supra.
    \40\ Cboe assesses a fee of $750 per port up to 5 BOE/FIX 
Logical Ports, and $800 per port for over 5 BOE/FIX Logical Ports. 
See Cboe's Fees Schedule.
    \41\ Cboe assesses $750 for Drop Logical Ports and $850 for 
Purge Ports. See Cboe's Fees Schedule.
    \42\ BOX assesses tiered FIX Port Fees as follows: $500 per port 
per month for the first FIX Port, $250 per port per month for FIX 
Ports 2-5 and $150 per port per month for over 5 FIX Ports. BOX 
assesses $1000 per month for all SAIL Ports for Market Making and 
$500 per month per port up to 5 ports for order entry and $150 per 
month for each additional port. See BOX's Fee Schedule.
    \43\ BOX assesses Drop Copy Port Fees of $500 per port per month 
for each month a Participant is credentialed to use a Drop Copy 
Port. Drop Copy Port Fees will be capped at $2,000 per month. See 
BOX's Fee Schedule.
    \44\ MIAX tiers its FIX Port fees as follows: $550 per month for 
the 1st FIX Port, $350 per month per port for the FIX Ports 2 
through 5 and $150 per month for over 5 FIX Ports. MIAX tiers its 
MEI Port Fees and assesses fees per number of classes and as a 
percentage of National Average Daily Volume. MEI Port fees range 
from $5,000 to $20,500 per month. The applicable fee rate is the 
lesser of either the per class basis or percentage of total national 
average daily volume measurement. However, if the Market Maker's 
total monthly executed volume during the relevant month is less than 
0.060% of the total monthly executed volume reported by The Options 
Clearing Corporation in the market maker account type for MIAX-
listed option classes for that month, then the fee will be $14,500 
instead of the fee otherwise applicable. MIAX will assess monthly 
MEI Port Fees on Market Makers in each month the Member has been 
credentialed to use the MEI Port in the production environment and 
has been assigned to quote in at least one class. See MIAX's Fee 
Schedule.
    \45\ MEI Port Fees include MEI Ports at the Primary, Secondary 
and Disaster Recovery data centers. MIAX Market Makers may request 
additional Limited Service MEI Ports for which MIAX will assess MIAX 
Market Makers $100 per month per additional Limited Service MEI Port 
for each engine. See MIAX's Fee Schedule.
    \46\ For each month in which the MIAX Market Maker has been 
credentialed to use Purge Ports in the production environment and 
has been assigned to quote in at least one class, the Exchange will 
assess the MIAX Market Maker a flat fee of $1,500 per month, 
regardless of the number of Purge Ports allocated to the MIAX Market 
Maker. The MEI Port Fee for a Market Maker that trades solely in 
Proprietary Products is waived until December 31, 2022. See MIAX's 
Fee Schedule.
    \47\ See MIAX's Fee Schedule.
    \48\ See MIAX's Fee Schedule.
    \49\ NYSE Arca assesses a tiered order/quote entry port fee of 
$450 for the first 40 ports and $150 per port per month for the 41 
ports or greater. For purpose of calculating the number of order/
quote entry ports and quote takedown ports, NYSE Arca aggregates the 
ports of affiliates. See NYSE Arca Options Fees and Charges.
    \50\ Any quote takedown port utilized by a NYSE Arca Market 
Maker that is in excess of the number of order/quote entry ports 
utilized will be counted and charged as an order/quote entry port. 
See NYSE Arca Options Fees and Charges.
    \51\ Only one fee per drop copy port shall apply, even if 
receiving drop copies from multiple order/quote entry ports and/or 
from NYSE Arca Equities). For the backup datacenter port, no fee 
shall apply if configured such that it is duplicative of another 
drop copy port of the same user. See NYSE Arca Options Fees and 
Charges.
    \52\ NYSE ARCA capped fees for Order/Quote Entry Ports, Quote 
Takedown Ports, and Drop Copy Ports are based on the total number of 
such ports an OTP Holder or OTP Firm is billed for in the month 
preceding the beginning of the NYSE ARCA's migration to the Pillar 
platform, during the Pillar Migration.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any intermarket burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.
    Nothing in the proposal burdens inter-market competition because 
MRX's proposal to offer the first FIX and SQF Ports for free, as well 
as the first Disaster Recovery version of these ports, permits MRX to 
set fees, similar to other options markets, while continuing to allow 
MRX Members to meet their regulatory obligations. MRX's offering would 
permit Electronic Access Members and Market Makers the ability to 
submit orders and quote to MRX at no cost. The remainder of the port 
offerings (additional FIX and SQF Ports, additional FIX and SQF 
Disaster Recovery Ports, SQF Purge Port, OTTO Port, CTI Port, FIX DROP 
Port and Disaster Recovery Ports for SQF Purge Ports, OTTO Ports, CTI 
Ports, and FIX DROP Ports) are not required for MRX Members to meet 
their regulatory obligations. The proposed port fees are similar to 
port fees assessed by other options markets as noted in this proposal.
    Nothing in the proposal burdens intra-market competition because 
the Exchange would uniformly assess the port fees to all Members, as 
applicable, and would uniformly apply monthly caps. With respect to the 
higher fees assessed for SQF Ports and SQF Purge Ports, the Exchange 
notes that only Market Makers may utilize these ports. Market Makers 
are required to provide continuous two-sided quotes on a daily 
basis,\53\ and are subject to various obligations associated with 
providing liquidity.\54\ As a result of these quoting obligations, the 
SQF Port and SQF Purge Port are designed to handle higher throughput to 
permit Market Makers to bundle orders to meet their obligations. The 
technology to permit Market Makers to submit a greater number of 
quotes, in addition to the various risk protections \55\ afforded to 
these market participants when quoting, accounts for the higher SQF 
Port and SQF Purge Port fees.
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    \53\ See MRX Options 2, Section 5.
    \54\ See MRX Options 2, Section 4.
    \55\ See MRX Options 3, Section 15(a)(3). Market Makers are 
offered risk protections to permit them to manage their risk more 
effectively.

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[[Page 8980]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or 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.\56\
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    \56\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 [email protected]. Please include 
File Number SR-MRX-2023-05 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-MRX-2023-05. 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-MRX-2023-05 and should be submitted on 
or before March 3, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\57\
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    \57\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-02946 Filed 2-9-23; 8:45 am]
BILLING CODE 8011-01-P