Document ID: SEC-2014-1191-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange LLC
Posted Date: 2014-07-16T04:00Z

[Federal Register Volume 79, Number 136 (Wednesday, July 16, 2014)]
[Notices]
[Pages 41612-41613]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16647]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72583; File No. SR-MIAX-2014-37]

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

July 10, 2014.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on June 30, 2014, Miami International Securities 
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') a proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Exchange. 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 its Fee Schedule. The 
text of the proposed rule change is available on the Exchange's Web 
site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to establish a monthly transaction fee cap of 
$60,000 for orders that are entered and executed for an account 
identified by an Electronic Exchange Member for clearing in the OCC 
``Firm'' range ``Monthly Firm Fee Cap.'' The Monthly Firm Fee Cap is 
based on the similar fees of another competing options exchange.\3\
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    \3\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II. See 
also Securities Exchange Act Release Nos. 59393 (February 11, 2009). 
74 FR 7721 (February 19, 2009) (SR-PHLX-2009-12); 65888 (December 5, 
2011), 76 FR 77046 (December 9, 2011) (SR-PHLX-2011-160). See also 
NYSE Amex Options Fee Schedule, p. 17. In contrast to PHLX and NYSE 
MKT, the Exchange does not propose to exclude all dividend, merger, 
and short stock interest strategy executions from the Monthly Firm 
Fee Cap. In addition, in contrast to PHLX, the Exchange does not at 
this time propose to apply the Monthly Firm Fee Cap to proprietary 
orders effected for the purpose of hedging the proprietary over-the-
counter trading of an affiliate of a Member that qualifies for the 
Monthly Firm Fee Cap. Further, in contrast to PHLX and NYSE MKT 
which apply to floor and manual transactions respectively, since the 
Exchange is a fully electronic exchange and thus does not have a 
trading floor or manual trading, the Monthly Firm Fee Cap will apply 
to electronic Firm transactions.
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    The current transaction fees for Firms on the Exchange are $0.25 
transaction fee for executions in standard option contracts and $0.025 
transaction fee for Mini Option contracts. As proposed, in a single 
billing month the total amount of transaction fees for Firms would be 
capped and thus would not exceed $60,000. Members must notify the 
Exchange in writing of all accounts in which the Member is not trading 
in its own proprietary account. The Exchange will not make adjustments 
to billing invoices where transactions are commingled in accounts which 
are not subject to the Monthly Firm Fee Cap.
    Mini Option contracts are not eligible for inclusion in the Monthly 
Firm Fee Cap. Firm transactions in Mini Options, however, will continue 
to be executed at the rate of $0.025 per contract. Mini Options 
contracts are excluded from the Monthly Firm Fee Cap because the cost 
to the Exchange to process quotes, orders and trades in Mini Options is 
the same as for standard options. This, coupled with the lower per-
contract transaction fees charged to other market participants, makes 
it impractical to offer Members a transaction fee cap for Firm Mini 
Option volume that they transact. The Exchange notes that this 
exclusion is nearly identical to ones made by other exchanges.\4\
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    \4\ See NASDAQ OMX PHLX LLC Pricing Schedule, Preface A; NYSE 
Amex Options Fee Schedule, p. 17.
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    The proposed Monthly Firm Fee Cap is intended to create an 
additional incentive for Firms to send order flow to the Exchange. The 
Exchange believes that the proposed Monthly Firm Fee Cap would increase 
both intermarket and intramarket competition by incenting Firms on 
other exchanges to direct additional orders to the Exchange to allow 
the Exchange to compete more effectively with other options exchanges 
for such transactions.
    The Exchange proposes to implement the new transaction fees 
beginning July 1, 2014.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \5\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposal is fair, equitable and not 
unreasonably [sic] discriminatory. The proposed Monthly Firm Fee Cap is 
reasonable because it is designed to be lower than the range of similar 
transaction fees on another competing

[[Page 41613]]

options exchange in order to increase competition for order flow from 
Firms. The proposed fees are fair and equitable and not unreasonably 
[sic] discriminatory because they will apply equally to all Members 
that have transactions that clear in the Firm range. All Firms will be 
subject to the same transaction fee, and access to the Exchange is 
offered on terms that are not unfairly discriminatory. Providing a fee 
cap for Firms and not for other types of transactions is not unfairly 
discriminatory, because it is intended as a competitive response to 
create an additional incentive for Firms to send order flow to the 
Exchange in a manner consistent with other exchanges. Firms that value 
such incentives will have another venue to send their order flow. To 
the extent that there is additional competitive burden on non-Firm 
Members, the Exchange believes that this is appropriate because the 
proposal should incent Members to direct additional order flow to the 
Exchange and thus provide additional liquidity that enhances the 
quality of its markets and increases the volume of contracts traded 
here. To the extent that this purpose is achieved, all the Exchange's 
market participants should benefit from the improved market liquidity. 
Enhanced market quality and increased transaction volume that results 
from the anticipated increase in order flow directed to the Exchange 
will benefit all market participants and improve competition on the 
Exchange.

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 proposed fees are lower 
than the range of similar transaction fees found on other options 
exchanges; therefore, the Exchange believes the proposal is consistent 
with robust competition by increasing the intermarket competition for 
order flow from Firms. To the extent that there is additional 
competitive burden on non-Firm Members, the Exchange believes that this 
is appropriate because the proposal should incent Members to direct 
additional order flow to the Exchange and thus provide additional 
liquidity that enhances the quality of its markets and increases the 
volume of contracts traded here. To the extent that this purpose is 
achieved, all the Exchange's market participants should benefit from 
the improved market liquidity. Enhanced market quality and increased 
transaction volume that results from the anticipated increase in order 
flow directed to the Exchange will benefit all market participants and 
improve competition on the Exchange. The Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges and to attract order flow. The Exchange believes that the 
proposal reflects this competitive environment.

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.\7\ At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     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-2014-37 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-2014-37. 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-MIAX-2014-37 and should be 
submitted on or before August 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16647 Filed 7-15-14; 8:45 am]
BILLING CODE 8011-01-P