Document ID: SEC-2023-0756-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2023-07-19T04:00Z

[Federal Register Volume 88, Number 137 (Wednesday, July 19, 2023)]
[Notices]
[Pages 46285-46287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15261]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97893; File No. SR-MEMX-2023-13]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule To Waive Membership Fees for New Members 
Temporarily

July 13, 2023.
    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 June 30, 2023, 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 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 waive the membership fees (``Membership Fees'') 
for approximately the next six months for all new Members of the 
Exchange. The Exchange will implement the membership fee waiver (the 
``Membership Fee Waiver'') for the period of time commencing 
immediately and ending on December 31, 2023. 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 Exchange proposes to modify its fee schedule in order to waive 
the Membership Fees for all new Members of the Exchange who join the 
Exchange through December 31, 2023. The Exchange will implement the 
Membership Fee Waiver (as defined above) until December 31, 2023. The 
Exchange notes that the proposed change does not amend any existing fee 
or rebate for equities transactions, market data or connectivity fees. 
The sole change proposed herein is to waive membership fees for new 
Members of the Exchange, as described below.
    MEMX currently charges $200 per month to maintain active 
membership. In preparation for the launch of the Exchange's options 
market (``MEMX Options''),\4\ the Exchange wishes to

[[Page 46286]]

encourage additional participants to join the Exchange by waiving the 
Exchange's membership fee for such new participants. The Exchange 
proposes to apply the Membership Fee Waiver to all new Members ending 
on December 31, 2023. Specifically, the Exchange is proposing to add a 
description under ``Membership'' in the Exchange's Fee Schedule, noting 
that Membership Fees will be waived for new Members of the Exchange 
until January 1, 2024.
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    \4\ On August 8, 2022, the Commission approved SR-MEMX-2022-10, 
which proposed rules for the trading of options on the Exchange. See 
Securities Exchange Act Release No. 95445 (August 9, 2022) [sic], 87 
FR 49884 (August 12, 2022) (SR-MEMX-2022-010). The Exchange plans to 
launch MEMX Options in September of 2023.
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    Although the Exchange notes that the proposed change is intended 
primarily to encourage new participants to join the Exchange in order 
to participate on the MEMX Options market and the Exchange believes the 
participants that will benefit from this waiver are firms that will do 
so, the Exchange is intentionally proposing the waiver to apply broadly 
to all new participants on the Exchange, including firms that would 
trade only on the Exchange's market for equity securities or on both 
the Exchange's market for equity securities and MEMX Options.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and 
furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 
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 its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes it is reasonable to waive the Membership Fee 
for new Members of the Exchange, primarily to provide an incentive for 
options trading firms to apply for Exchange membership in advance of 
the launch of MEMX Options. The options markets are quote-driven 
markets and are dependent on liquidity providers for liquidity and 
price discovery. The proposal will be of particular importance in 
encouraging liquidity providers to become members of the Exchange, 
which may result in more trading opportunities, enhanced competition, 
and improved overall market quality on the Exchange. Although the 
proposed change is intended primarily to encourage new participants to 
join the Exchange in order to participate on the MEMX Options market 
and the Exchange believes the participants that will benefit from this 
waiver are firms that will do so, the Exchange also believes that it is 
reasonable to adopt the waiver in a manner that applies broadly to all 
new participants on the Exchange, including firms that would trade only 
on the Exchange's market for equity securities or on both the 
Exchange's market for equity securities and MEMX Options.
    In addition, the Exchange believes that the proposed Membership Fee 
Waiver is equitable and not unfairly discriminatory in that it will 
apply uniformly to all new Members of the Exchange. Further, the 
Exchange believes that the waiver is reasonable, equitable and not 
unfairly discriminatory to current Members of the Exchange because the 
majority of the Exchange's current Members joined at a time when the 
Exchange did not impose membership fees (also to incentivize such 
participants to join), and thus have already received this benefit.

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 change would 
encourage market participants who have not already done so to join the 
Exchange. As a result, if such participants do join the Exchange and 
route their orders to the Exchange or support other Members that route 
orders (i.e., clearing firms) the Exchange believes the proposal would 
enhance its competitiveness as a market. Encouraging additional 
participants to join the Exchange will enable a greater number of 
participants to be onboard when MEMX Options launches. Attracting a 
greater number of participants will foster greater competition on the 
Exchange, particularly in the case of MEMX Options which is a quote-
driven market. For these reasons, the Exchange believes that the 
proposal 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.'' \7\
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    \7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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Intramarket Competition
    As discussed above, the Exchange believes that the proposal would 
encourage new participants to apply for Exchange membership, thereby 
enhancing liquidity and market quality on the Exchange, as well as 
enhancing the attractiveness of the Exchange as a trading venue, which 
the Exchange believes, in turn, would continue to encourage market 
participants to direct additional order flow to the Exchange.
    The Exchange does not believe that the proposed changes would 
impose any burden on intramarket competition because such changes will 
incentivize new participants to join the Exchange and the majority of 
the Exchange's current members joined at a time when the Exchange did 
not impose membership fees (also to incentivize such participants to 
join), and thus have already received this benefit. The options markets 
are quote-driven markets and are dependent on liquidity providers for 
liquidity and price discovery. The proposal will be of particular 
importance in encouraging liquidity providers to become members of the 
Exchange, which may result in more trading opportunities, enhanced 
competition, and improved overall market quality on the Exchange. For 
the foregoing reasons, 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
    As described above, the proposed Membership Fee Waiver will 
incentive market participants to join the Exchange during the 
Membership Fee Waiver period. Accordingly, the Exchange believes the 
proposal would not burden, but rather promote, intermarket competition 
by enabling it to better compete with other options exchanges at the 
time MEMX Options launches. In addition, as noted above, the Exchange 
has intentionally proposed to adopt the waiver broadly so that it is 
also applicable to new Members that will participate on the Exchange's 
market for equity securities or that will participate on such market as 
well as MEMX Options, and thus, the proposal may also better enable the 
Exchange to compete with other equities exchanges.

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.

[[Page 46287]]

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 \8\ and Rule 19b-4(f)(2) \9\ thereunder.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 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 change 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MEMX-2023-13 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-2023-13. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-MEMX-2023-13 and should be 
submitted on or before August 9, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-15261 Filed 7-18-23; 8:45 am]
BILLING CODE 8011-01-P