Document ID: SEC-2021-0229-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2021-02-17T05:00Z

[Federal Register Volume 86, Number 30 (Wednesday, February 17, 2021)]
[Notices]
[Pages 9963-9968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03087]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91094; File No. SR-MEMX-2021-02]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule

February 10, 2021.
    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 January 29, 2021, MEMX LLC (``MEMX'' or the ``Exchange'') filed 
with the Securities and Exchange Commission (the ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The

[[Page 9964]]

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 with the Commission a proposed rule change 
to amend the Exchange's fee schedule applicable to Members \3\ (the 
``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and (c). The 
Exchange proposes to implement the changes to the Fee Schedule pursuant 
to this proposal on February 1, 2021. The text of the proposed rule 
change is provided in Exhibit 5.
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    \3\ See Exchange Rule 1.5(p).
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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 purpose of the proposed rule change is to amend the Fee 
Schedule to (i) increase the standard rebate for executions of orders 
(other than Retail Orders \4\) in securities priced at or above $1.00 
per share that add displayed liquidity to the Exchange; (ii) increase 
the standard rebate for executions of Retail Orders in securities 
priced at or above $1.00 per share that add displayed liquidity to the 
Exchange; (iii) increase the standard fee for executions of orders in 
securities priced at or above $1.00 per share that remove liquidity 
from the Exchange; and (iv) adopt a fee for executions of orders in 
securities priced below $1.00 per share that are routed to and executed 
on an away market and that remove liquidity from the market to which 
they are routed.
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    \4\ A ``Retail Order'' means an agency or riskless principal 
order that meets the criteria of FINRA Rule 5320.03 that originates 
from a natural person and is submitted to the Exchange by a Retail 
Member Organization, provided that no change is made to the terms of 
the order with respect to price or side of market and the order does 
not originate from a trading algorithm or any other computerized 
methodology. See Exchange Rule 11.21(a).
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    The Exchange first notes that it operates in a highly competitive 
market in which market participants can readily direct order flow to 
competing venues if they deem fee levels at a particular venue to be 
excessive or rebates/incentives to be insufficient. More specifically, 
the Exchange is only one of 16 registered equities exchanges, as well 
as a number of alternative trading systems and other off-exchange 
venues, to which market participants may direct their order flow. Based 
on publicly available information, no single registered equities 
exchange currently has more than approximately 15% of the total market 
share of executed volume of equities trading.\5\ Thus, in such a low-
concentrated and highly competitive market, no single equities trading 
venue possesses significant pricing power in the execution of order 
flow, and the Exchange currently represents less than 1% of the overall 
market share.\6\
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    \5\ Market share percentage calculated month-to-date for January 
2021 as of January 28, 2021. The Exchange receives and processes 
data made available through consolidated data feeds (i.e., CTS and 
UTDF).
    \6\ Id.
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Increased Standard Rebate for Added Displayed Volume
    The Exchange proposes to increase the standard rebate provided for 
executions of orders (other than Retail Orders) in securities priced at 
or above $1.00 per share that are displayed on the MEMX Book \7\ and 
add liquidity to the Exchange (``Added Displayed Volume''). Currently, 
the Exchange provides a standard rebate of $0.0029 per share for 
executions of Added Displayed Volume. The Exchange now proposes to 
increase the standard rebate provided for executions of Added Displayed 
Volume to $0.0034 per share.
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    \7\ ``MEMX Book'' refers to the Exchange system's electronic 
file of orders. See Exchange Rule 1.5(q).
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Increased Standard Rebate for Added Displayed Retail Volume
    The Exchange also proposes to increase the standard rebate provided 
for executions of Retail Orders in securities priced at or above $1.00 
per share that are displayed on the MEMX Book and add liquidity to the 
Exchange (``Added Displayed Retail Volume''). Currently, the Exchange 
provides a standard rebate of $0.0034 per share for executions of Added 
Displayed Retail Volume. The Exchange now proposes to increase the 
standard rebate provided for executions of Added Displayed Retail 
Volume to $0.0037 per share. As a recent entrant in the equities market 
and to attract additional order flow to the Exchange to help it compete 
with other equities trading venues, the Exchange previously adopted a 
higher standard rebate for executions of Added Displayed Retail Volume 
relative to the standard rebate for executions of Added Displayed 
Volume to incentivize Members to submit additional order flow in the 
form of Retail Orders to the Exchange.\8\ The proposed increase rebate 
for executions of Added Displayed Retail Volume is designed to maintain 
a higher rebate for such orders relative to the standard rebate for 
Added Displayed Volume, which the Exchange is proposing to increase 
from $0.0029 per share to $0.0034 per share, as described above.
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    \8\ See Securities Exchange Act Release No. 90555 (December 3, 
2020), 85 FR 79244 (December 9, 2020) (SR-MEMX-2020-14).
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Increased Standard Fee for Removed Volume
    The Exchange also proposes to increase the standard fee charged for 
executions of orders in securities priced at or above $1.00 per share 
that remove liquidity from the Exchange (``Removed Volume''). 
Currently, the Exchange charges a standard fee of $0.0025 per share for 
executions of Removed Volume. The Exchange now proposes to increase the 
standard fee charged for executions of Removed Volume to $0.0026 per 
share.
Adoption of Standard Fee for Routed Removed Sub-Dollar Volume
    Lastly, the Exchange proposes to adopt a standard fee for 
executions of orders in securities priced below $1.00 per share that 
are routed to and executed on an away market and that remove liquidity 
from the market to which they are routed (``Routed Removed Sub-Dollar 
Volume''). Currently, the Exchange does not charge a fee or provide a 
rebate for executions of Routed Removed Sub-Dollar Volume. The Exchange 
now proposes to charge a standard fee of 0.30% of the total dollar 
value of each execution of Routed Removed Sub-Dollar Volume. The 
Exchange notes that the routing services offered by the Exchange and 
its affiliated broker-dealer are completely optional and market 
participants can readily select between various providers of routing 
services, including other exchanges and broker-dealers.
Additional Discussion
    The purpose of the proposed increased standard rebates for 
executions of Added Displayed Volume

[[Page 9965]]

and Added Displayed Retail Volume is for business and competitive 
reasons, as the Exchange believes such increased rebates would 
incentivize Members to submit additional displayed liquidity-adding 
order flow (including both Retail Orders and non-retail orders) to the 
Exchange, which the Exchange believes would promote price discovery and 
price formation, provide more trading opportunities and tighter 
spreads, and deepen liquidity that is subject to the Exchange's 
transparency, regulation and oversight, thereby enhancing market 
quality to the benefit of all Members and investors.
    The purpose of the proposed increased standard fee for executions 
of Removed Volume and the proposed adoption of a standard fee for 
executions of Routed Removed Sub-Dollar Volume is also for business and 
competitive reasons, as the Exchange believes such fees would generate 
additional revenue to offset some of the costs associated with the 
proposed increased rebates for executions of Added Displayed Volume and 
Added Displayed Retail Volume described above, and the Exchange's 
operations generally, in a manner that is consistent with the 
Exchange's overall pricing philosophy of encouraging added displayed 
liquidity. The proposed standard fee for executions of Routed Removed 
Sub-Dollar Volume is also intended to recoup some of the Exchange's 
costs associated with handling such orders, including the costs of 
operating the Exchange's affiliated routing broker-dealer and the 
applicable fees charged by the away market for removing liquidity, as 
the current pricing structure would require the Exchange to absorb all 
such costs.
    The proposed rule change does not include different fees or rebates 
that depend on the amount of orders submitted to, and/or transactions 
routed or executed on or through, the Exchange or its affiliated 
routing broker-dealer. Accordingly, all fees and rebates described 
above are applicable to all Members, regardless of the overall volume 
of a Member's routing or trading activities on or through the Exchange 
or its affiliated routing broker-dealer.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and with 
Sections 6(b)(4) and (5) of the Act,\10\ in particular, in that 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 and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4) and (5).
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    As discussed above, the Exchange operates in a highly fragmented 
and competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive or incentives to be insufficient, and the 
Exchange represents only a small percentage of the overall market. The 
Commission and the courts have repeatedly expressed their preference 
for competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and also recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \11\
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    \11\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005).
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue to reduce use of certain categories of 
products, in response to new or different pricing structures being 
introduced into the market. The Exchange also reiterates that the 
routing services offered by the Exchange and its affiliated broker-
dealer are completely optional and that the Exchange operates in a 
highly competitive market in which market participants can readily 
select between various providers of routing services with different 
product offerings and different pricing. Accordingly, competitive 
forces constrain the Exchange's transaction fees and rebates generally, 
including with respect to Added Displayed Volume, Added Displayed 
Retail Volume, Removed Volume and Routed Removed Sub-Dollar Volume, and 
market participants can readily trade on and/or or utilize the routing 
services of competing venues if they deem pricing levels or product 
offerings at those other venues to be more favorable. The Exchange 
believes the proposed rule change reflects a reasonable and competitive 
pricing structure designed to incentivize market participants to add 
aggressively priced displayed liquidity and direct their order flow to 
the Exchange, which the Exchange believes would promote price discovery 
and price formation, provide more trading opportunities and tighter 
spreads, and deepen liquidity that is subject to the Exchange's 
transparency, regulation and oversight, thereby enhancing market 
quality to the benefit of all Members and investors.
Increased Standard Rebate for Added Displayed Volume
    The Exchange believes the proposed increased standard rebate for 
executions of Added Displayed Volume is reasonable, equitable and 
consistent with the Act because it is designed to incentivize Members 
to submit additional displayed liquidity-adding orders to the Exchange, 
which would enhance liquidity on the Exchange and promote price 
discovery and price formation. The Exchange further believes the 
proposed increased standard rebate is reasonable and appropriate 
because it is comparable to, and competitive with, the rebates provided 
by other exchanges for executions of liquidity-adding displayed non-
retail orders in securities priced at or above $1.00 per share.\12\ 
However, the Exchange notes that certain of these exchanges provide a 
tiered pricing structure that provides a comparable rebate for 
executions of liquidity-adding displayed non-retail orders in 
securities priced at or above $1.00 per share only when certain volume 
thresholds are met.\13\ The Exchange believes that, consistent with the 
Exchange's existing pricing structure, it is reasonable, equitable and 
not unfairly discriminatory to provide a higher rebate for executions 
of displayed orders that add liquidity than to non-displayed orders as 
this rebate structure is designed to incentivize Members to submit 
displayed orders to the Exchange, thereby contributing to price 
discovery and price formation, consistent with the overall goal of 
enhancing market quality. The

[[Page 9966]]

Exchange further believes that this fee is equitably allocated and not 
unfairly discriminatory because it applies equally to all Members and, 
when coupled with lower fees for removing liquidity, is designed to 
facilitate increased activity on the Exchange to the benefit of all 
Members by providing more trading opportunities and promoting price 
discovery.
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    \12\ See, e.g., the MIAX PEARL, LLC equities trading fee 
schedule on its public website (available at https://www.miaxoptions.com/sites/default/files/fee_schedule-files/MIAX_PEARL_Equities_Fee_Schedule_01012021.pdf), which reflects a 
standard rebate of $0.0032 per share to add displayed liquidity in 
Tape A and Tape C securities priced at or above $1.00 per share and 
a standard rebate of $0.0035 per share to add displayed liquidity in 
Tape B securities priced at or above $1.00 per share; the NYSE Arca, 
Inc. (``NYSE Arca'') equities trading fee schedule on its public 
website (available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), which reflects rebates up 
to $0.0033 per share to add displayed liquidity in Tape A and Tape C 
securities priced at or above $1.00 per share depending on the 
applicable tier and rebates up to $0.0034 per share to add displayed 
liquidity in Tape B securities priced at or above $1.00 per share 
depending on the applicable tier.
    \13\ Id.
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    The Exchange notes that under this proposal the Exchange will 
continue to pay a higher rebate for Added Displayed Volume than the fee 
it charges for removing such volume, and as such the Exchange will 
continue to have a negative net capture (i.e., will lose money) with 
respect to such transactions. The Exchange notes that, as a recent 
entrant in the equities market, it will only utilize a pricing 
structure whereby it maintains a negative net capture with respect to 
such transactions for a limited time in an effort to encourage market 
participants to join, connect to, and participate on the Exchange. As 
noted above, the Exchange operates in a highly competitive market, and 
the Exchange believes this pricing structure will enable it to 
effectively compete with other exchanges by attracting Members and 
order flow to the Exchange, which will help the Exchange to gain market 
share for executions. The Exchange expects to modify its pricing 
structure after it has gained sufficient participation from market 
participants and market share for executions to eliminate the negative 
net capture and instead be profitable with respect to such 
transactions.
Increased Standard Rebate for Added Displayed Retail Volume
    Similarly, the Exchange believes the proposed increased standard 
rebate for executions of Added Displayed Retail Volume is reasonable, 
equitable and consistent with the Act because it is designed to 
incentivize Members to submit additional displayed liquidity-adding 
Retail Orders to the Exchange, which would enhance liquidity in Retail 
Orders on the Exchange and promote price discovery and price formation. 
The Exchange further believes the proposed increased standard rebate is 
reasonable and appropriate because it is comparable to, and competitive 
with, the rebates provided by other exchanges for executions of 
liquidity-adding displayed retail orders in securities priced at or 
above $1.00 per share.\14\ However, the Exchange notes that these 
exchanges provide a tiered pricing structure that provides a comparable 
rebate for executions of liquidity-adding displayed retail orders in 
securities priced at or above $1.00 per share only when certain volume 
thresholds are met.\15\ The Exchange believes that it is reasonable, 
equitable and not unfairly discriminatory to provide a higher rebate 
for executions of displayed Retail Orders that add liquidity than to 
non-displayed Retail Orders as this rebate structure is designed to 
incentivize Members to submit displayed orders to the Exchange, thereby 
contributing to price discovery and price formation, consistent with 
the overall goal of enhancing market quality.
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    \14\ See e.g., the NYSE Arca equities trading fee schedule on 
its public website (available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf), which 
reflects rebates ranging from $0.0033-$0.0038 per share, depending 
on the applicable tier, for retail orders in securities priced at or 
above $1.00 per share that add displayed liquidity; the Cboe EDGX 
Exchange, Inc. (``Cboe EDGX'') equities trading fee schedule on its 
public website (available at https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/), which reflects rebates ranging from 
$0.0032-$0.0037 per share, depending on the applicable tier, for 
retail orders in securities priced at or above $1.00 per share that 
add liquidity.
    \15\ Id.
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    The Exchange understands that Section 6(b)(5) of the Act \16\ 
prohibits an exchange from establishing rules that are designed to 
permit unfair discrimination between market participants. However, 
Section 6(b)(5) of the Act does not prohibit exchange members or other 
broker-dealers from discriminating, so long as their activities are 
otherwise consistent with the federal securities laws. While the 
Exchange believes that markets and price discovery optimally function 
through the interactions of diverse flow types, it also believes that 
growth in internalization has required differentiation of Retail Order 
flow from other order flow types. The differentiation proposed herein 
by the Exchange to maintain a higher rebate for Added Displayed Retail 
Volume relative to the standard rebate for Added Displayed Volume 
(i.e., non-retail orders) is not designed to permit unfair 
discrimination, but instead to promote a competitive process around 
Retail Order executions such that retail investors would continue to 
receive better rebates on the Exchange than comparable non-retail 
orders in order to encourage entry of Retail Orders to the Exchange. 
Accordingly, the Exchange believes the proposed increased standard 
rebate for executions of Added Displayed Retail Volume is equitably 
allocated and not unfairly discriminatory.
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    \16\ 15 U.S.C. 78f(b)(5).
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Increased Standard Fee for Removed Volume
    The Exchange believes the proposed increased standard fee for 
executions of Removed Volume is reasonable, equitable and consistent 
with the Act because it is designed to generate additional revenue to 
offset some of the costs associated with the proposed increased 
standard rebates for executions of Added Displayed Volume and Added 
Displayed Retail Volume in a manner that is consistent with the 
Exchange's overall pricing philosophy of encouraging added displayed 
liquidity. The Exchange further believes this proposed standard fee is 
reasonable and appropriate because it represents a modest increase from 
the current fee and remains lower than or comparable to, and 
competitive with, the fees charged by other exchanges for executions of 
orders in securities priced at or above $1.00 per share that remove 
liquidity.\17\ The Exchange further believes that this proposed 
standard fee is equitably allocated and not unfairly discriminatory 
because it will apply equally to all Members.
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    \17\ See, e.g., the Cboe EDGX equities trading fee schedule on 
its public website (available at https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/), which reflects a standard 
fee of $0.0027 per share to remove liquidity in securities priced at 
or above $1.00 per share; The Nasdaq Stock Market LLC (``Nasdaq'') 
trading fee schedule on its public website (available at http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2), which 
reflects a standard fee of $0.0030 per share to remove liquidity in 
securities priced at or above $1.00 per share.
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Adoption of Standard Fee for Routed Removed Sub-Dollar Volume
    The Exchange believes the proposed adoption of a standard fee of 
0.30% of the total dollar value of executions of Routed Removed Sub-
Dollar Volume is reasonable, equitable and consistent with the Act 
because it is designed to generate additional revenue to offset some of 
the costs associated with the proposed increased standard rebates for 
executions of Added Displayed Volume and Added Displayed Retail Volume, 
as well as to recoup some of the Exchange's costs associated with 
handling such orders, including the costs of operating the Exchange's 
affiliated routing broker-dealer and the applicable fees charged by the 
away market for removing liquidity, as the current pricing structure 
would require the Exchange to absorb all such costs, in a manner that 
is consistent with the Exchange's overall pricing philosophy of 
encouraging added displayed liquidity. The Exchange further believes 
this proposed standard fee is reasonable

[[Page 9967]]

and appropriate because it is identical to the fees charged by several 
other exchanges for executions of orders in securities priced below 
$1.00 per share that are routed to and executed on an away market and 
that remove liquidity from the market to which they are routed.\18\ The 
Exchange further believes that this proposed standard fee is equitably 
allocated and not unfairly discriminatory because it will apply equally 
to all Members that choose to use the Exchange's routing services.
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    \18\ See, e.g., the Cboe EDGX equities trading fee schedule on 
its public website (available at https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/), which reflects a standard 
fee of 0.30% of the total dollar value of executions of routed 
orders in securities priced below $1.00 per share that remove 
liquidity from the destination venue; the Cboe EDGA Exchange, Inc. 
equities trading fee schedule on its public website (available at 
https://markets.cboe.com/us/equities/membership/fee_schedule/edga/), 
which reflects a standard fee of 0.30% of the total dollar value of 
executions of routed orders in securities priced below $1.00 per 
share that remove liquidity from the destination venue; the Nasdaq 
equities trading fee schedule on its public website (available at 
http://www.nasdaqtrader.com/trader.aspx?id=pricelisttrading2), which 
reflects a standard fee of 0.30% of the total dollar value of 
executions of routed orders in securities priced below $1.00 per 
share that remove liquidity from the destination venue.
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    The Exchange also notes that the proposal does not include 
different fees or rebates that depend on the amount of orders submitted 
to, and/or transactions routed or executed on or through, the Exchange 
or its affiliated routing broker-dealer. Accordingly, the Exchange 
believes the proposed pricing changes are reasonable, equitable, and 
non-discriminatory as such changes are applicable to all Members, 
regardless of the overall volume of a Member's routing or trading 
activities on or through the Exchange or its affiliated broker-dealer.

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. Instead, as 
discussed above, the Exchange believes that the proposed changes would 
encourage the submission of additional order flow to the Exchange, 
thereby promoting market depth, enhanced execution opportunities, as 
well as price discovery and transparency for all Members. Furthermore, 
the Exchange believes that the proposed changes would allow the 
Exchange to continue to compete with other routing and execution venues 
by providing competitive pricing for transactions in Added Displayed 
Volume, Added Displayed Retail Volume, Removed Volume, and Routed 
Removed Sub-Dollar Volume, thereby making it a desirable destination 
venue for its customers. As a result, the Exchange believes that the 
proposed change furthers the Commission's goal in adopting Regulation 
NMS of fostering competition among orders, which promotes ``more 
efficient pricing of individual stocks for all types of orders, large 
and small.'' \19\
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    \19\ See supra note 11.
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Intramarket Competition
    The Exchange believes that the proposed changes would continue to 
incentivize market participants to direct order flow to the Exchange. 
Greater liquidity benefits all Members by providing more trading 
opportunities and encourages Members to send orders to the Exchange, 
thereby contributing to robust levels of liquidity, which benefits all 
Members. The proposed fees and rebates for transactions in Added 
Displayed Volume, Added Displayed Retail Volume, Removed Volume, and 
Routed Removed Sub-Dollar Volume would be available to all similarly-
situated market participants, and, as such, the proposed change would 
not impose a disparate burden on competition among market participants 
on the Exchange. As such, the Exchange believes the proposed changes 
would not impose any burden on intramarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
Intermarket Competition
    The Exchange operates in a highly competitive market with respect 
to execution and routing services. Members have numerous alternative 
venues that they may participate on and direct their order flow to, 
including 15 other equities exchanges and numerous alternative trading 
systems and other off-exchange venues. As noted above, no single 
registered equities exchange currently has more than approximately 15% 
of the total market share of executed volume of equities trading. Thus, 
in such a low-concentrated and highly competitive market, no single 
equities trading venue possesses significant pricing power in the 
execution of order flow. Moreover, the Exchange believes that the ever-
shifting market share among the exchanges from month to month 
demonstrates that market participants can shift order flow or 
discontinue to reduce use of certain categories of products, in 
response to new or different pricing structures being introduced into 
the market. Additionally, market participants can readily select 
between various providers of routing services with different product 
offerings and different pricing. Accordingly, competitive forces 
constrain the Exchange's transaction fees and rebates generally, 
including with respect to Added Displayed Volume, Added Displayed 
Retail Volume, Removed Volume, and Routed Removed Sub-Dollar Volume, 
and market participants can readily choose to send their orders to 
other exchange and off-exchange venues for execution and/or routing 
services if they deem fee levels or product offerings at those other 
venues to be more favorable. As described above, the proposed changes 
are competitive proposals through which the Exchange is seeking to 
encourage certain order flow to be sent to the Exchange.
    Additionally, the Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues and, also, recognized 
that current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \20\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows: 
``[n]o one disputes that competition for order flow is `fierce.' . . . 
As the SEC explained, `[i]n the U.S. national market system, buyers and 
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders 
for execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .''.\21\ Accordingly, the Exchange does not believe its 
proposed fee change imposes any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
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    \20\ Id.
    \21\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).

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[[Page 9968]]

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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 \22\ and Rule 19b-4(f)(2) \23\ thereunder.
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    \22\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \23\ 17 CFR 240.19b-4(f)(2).
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    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-MEMX-2021-02 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-MEMX-2021-02. 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 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. 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-MEMX-2021-02, and should be submitted on 
or before March 10, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03087 Filed 2-16-21; 8:45 am]
BILLING CODE 8011-01-P