Document ID: SEC-2015-1122-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2015-07-07T04:00Z

[Federal Register Volume 80, Number 129 (Tuesday, July 7, 2015)]
[Notices]
[Pages 38789-38791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16544]

[[Page 38789]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75334; File No. SR-MIAX-2015-42]

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

June 30, 2015.
    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 24, 2015, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options 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 amend its current MIAX Market Maker \3\ 
sliding scale for transaction fees to: (i) Modify the volume thresholds 
in tiers 3, 4; \4\ (ii) increase the transaction fee for volume tier 2; 
\5\ and (iii) increase the Priority Customer rebate incentive for tier 
2.
---------------------------------------------------------------------------

    \3\ ``MIAX Market Maker'' for purposes of the proposed sliding 
scale means any MIAX Market Maker including RMM, LMM, PLMM, DLMM, 
and DPLMM.
    \4\ The Commission notes that the Exchange proposes to change 
the Percentage Thresholds of National Market Maker Volume for tier 3 
from ``Above 0.50%-0.80%'' to ``Above 0.50%-1.00%'' and for tier 4 
from ``Above 0.80%-1.50%'' to ``Above 1.00%-1.50%.''
    \5\ The Commission notes that the Exchange proposes to increase 
the transaction fee for tier 2 from $0.17 to $0.19 for Penny Classes 
and from $0.21 to $0.23 for Non-Penny Classes.
---------------------------------------------------------------------------

    The sliding scale for MIAX Market Maker transaction fees is based 
on the substantially similar fees of the Chicago Board Options 
Exchange, Incorporated (``CBOE'').\6\ Specifically, the program reduces 
a MIAX Market Maker's per contract transaction fee based on percentages 
of total national Market Maker volume of any options classes that trade 
on the exchange during the calendar month, based on the following 
scale:
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 57191 
(January 24, 2008), 73 FR 5611 (January 30, 2008); 58321 (August 6, 
2008), 73 FR 46955 (SR-CBOE-2008-78). See also CBOE Fees Schedule, 
p. 3.

----------------------------------------------------------------------------------------------------------------
                                                                                                Per contract fee
                    Tier                     Percentage of national Market   Per contract fee    for non-penny
                                                      Maker volume          for penny classes       classes
----------------------------------------------------------------------------------------------------------------
1..........................................  0.00%-0.05%..................              $0.25              $0.29
2..........................................  Above 0.05%-0.50%............               0.19               0.23
3..........................................  Above 0.50%-1.00%............               0.12               0.16
4..........................................  Above 1.00%-1.50%............               0.07               0.11
5..........................................  Above 1.50%..................               0.05               0.09
----------------------------------------------------------------------------------------------------------------

    The sliding scale would apply to all MIAX Market Makers for 
transactions in all products except mini-options. A MIAX Market Maker's 
initial $0.25 per contract rate in Penny Pilot classes and $0.29 per 
contract in non-Penny Pilot classes will be reduced if the MIAX Market 
Maker reaches the volume thresholds set forth in the sliding scale in a 
month. As a MIAX Market Maker's monthly volume increases, its per 
contract transaction fee would decrease. The Market Maker sliding scale 
will continue to apply to MIAX Market Maker (RMM, LMM, DLMM, PLMM, 
DPLMM) transaction fees in all products except mini-options. MIAX 
Market Makers will continue to be assessed a $0.02 per executed 
contract fee for transactions in mini-options.
    The Exchange believes the proposed sliding scale is objective in 
that the fee reductions are based solely on reaching stated volume 
thresholds. The specific volume thresholds of the tiers were set based 
upon business determinations and an analysis of current volume levels. 
The specific volume thresholds and rates were set in order to encourage 
MIAX Market Makers to reach for higher tiers. The Exchange believes 
that the proposed changes to the tiered fee schedule may incent firms 
to display their orders on the Exchange and increase the volume of 
contracts traded here.
    As mentioned above, the Exchange notes that the proposed sliding 
fee scale for MIAX Market Makers structured on contract volume 
thresholds is based on the substantially similar fees of the CBOE.\7\ 
The Exchange also notes that a number of other exchanges have tiered 
fee schedules which offer different transaction fee rates depending on 
the monthly ADV of liquidity providing executions on their 
facilities.\8\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 58321 
(August 6, 2008), 73 FR 46955 (SR-CBOE-2008-78); 71295 (January 14, 
2014), 79 FR 3443 (January 21, 2014) (SR-CBOE-2013-129). The 
Exchange notes that CBOE does not charge market makers a 
differentiated transaction fee for non-Penny Pilot option classes.
    \8\ See, e.g., International Securities Exchange, LLC, Schedule 
of Fees, Section IV, C; NASDAQ Options Market, Chapter XV, Section 
2.
---------------------------------------------------------------------------

    The Exchange also proposes to increase the rebate incentive for 
Priority Customer orders to correspond with the increase in the 
transaction fee for tier 2 of the MIAX Market Maker sliding scale. The 
Exchange offers MIAX Market Makers the opportunity to reduce 
transaction fees by $0.02 per contract in

[[Page 38790]]

standard options if the Member or its affiliates of at least 75% common 
ownership between the firms as reflected on each firm's Form BD, 
Schedule A, qualifies in a given month for Priority Customer Rebate 
Program volume tiers 3, 4, or 5 in the Fee Schedule. The Exchange 
proposes to amend the rebate incentive for Priority Customer orders in 
order to increase the rebate incentive for tier 2 to correspond with 
the increase in transaction fees for volume tier 2 of the MIAX Market 
Maker sliding scale. As proposed, any Member or its affiliates of at 
least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A, that qualifies for Priority Customer Rebate 
Program volume tiers 3, 4, or 5 and is a MIAX Market Maker will be 
assessed $0.23 per contract for tier 1, $0.17 per contract for tier 2, 
$0.10 per contract for tier 3, $0.05 per contract for tier 4, and $0.03 
per contract for tier 5 for transactions in standard options Penny 
Pilot classes in lieu of the applicable transaction fees in the Market 
Maker sliding scale. Any Member or its affiliates of at least 75% 
common ownership between the firms as reflected on each firm's Form BD, 
Schedule A, that qualifies for Priority Customer Rebate Program volume 
tiers 3, 4, or 5 will be assessed $0.27 per contract for tier 1, $0.21 
per contract for tier 2, $0.14 per contract for tier 3, $0.09 per 
contract for tier 4, and $0.07 per contract for tier 5 for transactions 
in standard options in non-Penny Pilot classes in lieu of the 
applicable transaction fees in the Market Maker sliding scale. The 
Exchange believes that these incentives will encourage MIAX Market 
Makers to transact a greater number of orders on the Exchange.
    The proposed changes will become operative on July 1, 2015.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \9\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \10\ in particular, in 
that it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The proposed volume based discount fee structure is not 
discriminatory in that all MIAX Market Makers are eligible to submit 
(or not submit) liquidity, and may do so at their discretion in the 
daily volumes they choose during the course of the billing period. All 
similarly situated MIAX Market Makers are subject to the same fee 
structure, and access to the Exchange is offered on terms that are not 
unfairly discriminatory. Volume based discounts have been widely 
adopted by options and equities markets, and are equitable because they 
are open to all MIAX Market Makers on an equal basis and provide 
discounts that are reasonably related to the value of an exchange's 
market quality associated with higher volumes. The proposed fee levels 
and volume thresholds are reasonably designed to be comparable to those 
of other options exchanges employing similar fee programs, and also to 
attract additional liquidity and order flow to the Exchange.
    The Exchange's proposal to provide MIAX Market Makers the 
opportunity to reduce transaction fees by $0.02 per contract in 
standard options, provided certain criteria are met, is reasonable 
because the Exchange desires to offer all such market participants an 
opportunity to lower their transaction fees. The Exchange's proposal to 
offer MIAX Market Makers the opportunity to reduce transaction fees by 
$0.02 per contract in standard options, provided certain criteria are 
met, is equitable and not unfairly discriminatory because the Exchange 
offers all market participants, excluding Priority Customers, a means 
to reduce transaction fees by qualifying for volume tiers in the 
Priority Customer Rebate Program. The Exchange believes that offering 
all such market participants the opportunity to lower transaction fees 
by incentivizing them to transact Priority Customer order flow in turn 
benefits all market participants.
    The Exchange believes that its proposal to assess transaction fees 
in non-Penny Pilot options classes, which differs from Penny Pilot 
options classes, is consistent with other options markets that also 
assess different transaction fees for non-Penny Pilot options classes 
as compared to Penny Pilot options classes. The Exchange believes that 
establishing different pricing for non-Penny Pilot options and Penny 
Pilot options is reasonable, equitable, and not unfairly discriminatory 
because Penny Pilot options are more liquid options as compared to non-
Penny Pilot options. Additionally, other competing options exchanges 
differentiate pricing in a similar manner today in other types of 
transaction fees.\11\
---------------------------------------------------------------------------

    \11\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II 
(assessing differentiated transaction fees for Penny Pilot and non-
Penny Pilot options classes); NYSE Amex Options Fee Schedule, p. 6 
(assessing differentiated transaction fees for Penny Pilot and non-
Penny Pilot options classes); Chicago Board Options Exchange, 
Incorporated, Fee Schedule, p. 1 (assessing differentiated 
transaction fees for Penny Pilot and non-Penny Pilot options 
classes). See also Securities Exchange Act Release No. 68556 
(January 2, 2013), 78 FR 1293 (January 8, 2013) (SR-BX-2012-074). 
Please note that neither of these exchanges currently has 
differentiated pricing for non-Penny Pilot options classes in a 
tiered volume scale for market makers.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange 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 
proposed rule change reflects this competitive environment because it 
modifies the Exchange's fees in a manner that encourages market 
participants to provide liquidity and to send order flow to the 
Exchange.

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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\12\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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:

[[Page 38791]]

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-2015-42 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2015-42. 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 such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-MIAX-2015-42, and should be 
submitted on or before July 28, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-16544 Filed 7-6-15; 8:45 am]
BILLING CODE 8011-01-P