Document ID: SEC-2015-2128-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC,
Posted Date: 2015-12-23T05:00Z

[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)]
[Notices]
[Pages 79986-79989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32188]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76674; File No. SR-MIAX-2015-70]

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

December 17, 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 December 4, 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.
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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 the MIAX Options Fee 
Schedule (the ``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 Fee Schedule to: (i) Increase 
the transaction fees for transactions in standard options in non-Penny 
Pilot classes for Public Customers \3\ that are not a Priority 
Customer,\4\ Non-MIAX Market Makers, Non-Member Broker-Dealers, and 
Firms,\5\ and (ii) increase the transaction fees for transactions in 
standard options in Penny Pilot classes for Firms. The Exchange also 
proposes to modify the transaction fees for transactions for Public 
Customers that are not a Priority Customer, Non-MIAX Market Makers, 
Non-Member Broker-Dealers and Firms that achieve certain Priority 
Customer Rebate Program \6\ volume tiers. The proposed changes are 
based on the similar fees of other competing options exchanges.\7\
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    \3\ The term ``Public Customer'' means a person that is not a 
broker or dealer in securities. See Exchange Rule 100.
    \4\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s).
    \5\ This fee is assessed to an Electronic Exchange Member 
(``EEM'') that enters an order that is executed for an account 
identified by the EEM for clearing in the OCC ``Firm'' range. See 
Fee Schedule, Section 1)a)ii). The term ``Electronic Exchange 
Member'' means the holder of a Trading Permit who is not a Market 
Maker. Electronic Exchange Members are deemed ``members'' under the 
Exchange Act. See Exchange Rule 100.
    \6\ See Fee Schedule, Section 1)a)iii).
    \7\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; and 
Chicago Board Options Exchange, Incorporated, Fees Schedule, p. 1.
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    The Exchange is also proposing proportional fee changes applicable 
to Mini-Options in non-Penny Pilot classes, except that such fees 
applicable to Firms will be increased from $0.04 to $0.07 per contract, 
as described below. The Mini-Options transaction fee in

[[Page 79987]]

Penny Pilot classes will remain unchanged.
    Specifically, the Exchange proposes to assess a $0.75 per contract 
fee for transactions in standard options in non-Penny Pilot classes by 
Public Customers that are not a Priority Customer. The Exchange also 
proposes to assess a $0.75 per contract fee for transactions in 
standard options in non-Penny Pilot classes by Non-MIAX Market Makers. 
Additionally, the Exchange proposes to assess a $0.75 per contract fee 
for transactions in standard options in non-Penny Pilot classes by Non-
Member Broker-Dealers. The Exchange believes that these proposed fees 
are reasonable, equitable and not unfairly discriminatory because they 
are the same for all participants other than Priority Customers, who 
are not assessed transaction fees.
    Finally, the Exchange proposes to assess a $0.75 per contract fee 
for transactions in standard options in non-Penny Pilot classes by 
Firms. The Exchange believes that this proposed fee increase for Firms 
in non-Penny Pilot classes is equitable and not unfairly 
discriminatory. While Firms are currently charged significantly less 
(i.e., 20 cents per contract) than Public Customers that are not 
Priority Customers, non-MIAX Market Makers, and non-Member Broker-
Dealers, the Exchange is simply proposing to place market participants 
in all of these categories on equal footing by increasing the 
transaction fees in non-Penny Pilot classes for such participants, 
including Firms, to an equal amount of $0.75 per contract. This fee is 
intended to balance the costs incurred by the Exchange for the 
execution of such orders, and to encourage the submission and execution 
of Priority Customer orders on the Exchange at no charge.
    The Exchange also proposes to increase the transaction fees 
assessed for transactions in standard options in Penny Pilot classes 
for Firms from $0.37 to $0.45 per contract. The Exchange believes that 
this proposed fee increase is reasonable, equitable and not unfairly 
discriminatory because it creates a more even playing field among 
Public Customers that are not Priority Customers, non-MIAX Market 
Makers, non-Member Broker-Dealers, and Firms. The Exchange initially 
established the transaction fees for Firms at a significantly lower 
rate than the other named categories of participants as a competitive 
measure to attract order flow from Firms. The Exchange believes that a 
variety of incentives, including but not limited to transaction fees, 
now achieve this goal. Accordingly, the Exchange believes that it is 
reasonable, equitable and not unfairly discriminatory to increase the 
transaction fees in standard options for Firms in Penny Pilot classes 
to $0.45 per contract. This is still $0.02 less than the Penny Pilot 
class transaction fees for the other named categories of participants 
and the Exchange believes that it is still beneficial for competitive 
reasons to offer this fee to Firms.
    The Exchange proposes to continue to offer Public Customers that 
are not a Priority Customer, Non-MIAX Market Makers, Non-Member Broker-
Dealers and Firms the opportunity to reduce these transaction fees by 
$0.02 per contract in standard options.\8\ In order to accomplish this 
reduction in transaction fees, 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 or 4, and is: A Public Customer that is not a Priority 
Customer; a Non-MIAX Market Maker; a Non-Member Broker-Dealer; or a 
Firm will be assessed a reduced transaction fee of $0.73 per contract 
for standard options in non-Penny Pilot option classes. 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 or 4 and is a Firm will 
be assessed a reduced transaction fee of $0.43 per contract in Penny 
Pilot classes and $0.73 per contract in non-Penny Pilot classes. The 
Exchange believes that these incentives will encourage these market 
participants to transact a greater number of orders on the Exchange.
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    \8\ See Securities Exchange Release Nos. 72988 (September 4, 
2014), 79 FR 53808 (September 10, 2014) (SR-MIAX-2014-46); 72989 
(September 4, 2014), 79 FR 53792 (September 10, 2014) (SR-MIAX-2014-
47).
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    The Exchange is also proposing to increase the transaction fees for 
Mini-Options in non-Penny classes from $0.06 to $0.07 for Public 
Customers that are not Priority Customers, Non-MIAX Market Makers and 
Non-Member Broker-Dealers. This represents a proportional increase in 
the applicable transaction fees for standard options in non-Penny Pilot 
classes. The Exchange is also proposing to increase the Mini-Option fee 
in non-Penny Pilot classes for Firms from its current $0.04 per 
contract to $0.07 per contract. This also represents a proportional 
increase relative to the proposed fees for non-Penny Pilot classes in 
standard options, placing Firms on an even playing field with other 
non-Priority Customer participants in Mini-Options.
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 and issuers and other persons using its 
facilities.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange's proposal to increase the transaction fees is 
reasonable because the Exchange's fees will remain competitive with 
fees at other options exchanges.\11\ The Exchange's proposal to 
increase the transaction fees for these market participants is 
equitable and not unfairly discriminatory because the increase applies 
equally to all of the participants in each category of market 
participant. The Exchange does not assess transactions fees on Priority 
Customers because Priority Customer order flow enhances liquidity on 
the Exchange for the benefit of all market participants by providing 
more trading opportunities, which attracts Market Makers and other 
market participants. An increase in the activity of these market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants. MIAX Market Makers are assessed lower transaction fees as 
compared to Public Customers that are not a Priority Customer, Non-MIAX 
Market Makers, Non-Member Broker-Dealers, and Firms because they have 
market-making obligations and regulatory requirements, which normally 
do not apply to market participants that are not MIAX Market 
Makers.\12\ MIAX Market Makers have obligations to make continuous 
markets, engage in a course of dealings reasonably calculated to 
contribute to the maintenance of a fair and orderly market, and not 
make bids or offers or enter into transactions that are inconsistent 
with a course of dealings. In addition, Members are subject to other 
fees and dues associated with their membership to the Exchange that do 
not apply to non-Members, and the instant proposal recognizes the 
differing contributions made to the liquidity and trading environment 
on the Exchange by these market participants. The $0.75 per contract 
fee for transactions in standard options in non-Penny Pilot classes by

[[Page 79988]]

Public Customers that are not a Priority Customer, Non-MIAX Market 
Makers, Non-Member Broker-Dealers and Firms are reasonable, equitable 
and not unfairly discriminatory because they are the same for all 
market participants other than Priority Customers, who are not assessed 
transaction fees.
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    \11\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; and 
Chicago Board Options Exchange, Incorporated, Fees Schedule, p. 1.
    \12\ See Exchange Rules 603 and 604.
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    The Exchange believes that the proposed fee increase for standard 
options in Penny Pilot classes for Firms is reasonable, equitable and 
not unfairly discriminatory because it creates a more even playing 
field among Public Customers that are not Priority Customers, non-MIAX 
Market Makers, non-Member Broker-Dealers, and Firms.
    The Exchange further believes that the proposed increase in 
transaction fees in Mini-Options in non-Penny Pilot classes for Firms 
from its current $0.04 per contract to $0.07 per contract is 
reasonable. equitable, and not unfairly discriminatory because it 
simply represents a proportional increase relative to the proposed fees 
for non-Penny Pilot classes in standard options, placing Firms on an 
even playing field with other non-Priority Customer participants in 
Mini-Options.
    The Exchange's proposal to offer Public Customers that are not a 
Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers 
and Firms the continued opportunity to reduce transaction fees by $0.02 
per contract in standard options 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 such market 
participants the continued 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 
will offer all market participants that are charged transaction fees a 
means to reduce such transaction fees by reaching volume tiers in the 
Priority Customer Rebate Program. The Exchange believes that the 
opportunity to lower transaction fees through incentives to transact 
Priority Customer order flow benefits all market participants.
    The Exchange believes that the proposal to allow the aggregation of 
trading activity of Members and their affiliates for purposes of the 
fee reduction is fair, equitable and not unreasonably discriminatory. 
The Exchange believes the proposed rule change is reasonable because it 
would allow aggregation of the trading activity of qualified affiliates 
only in very narrow circumstances, namely, where the affiliate meets 
the definition of an ``affiliate'' as stated in the Fee Schedule. 
Furthermore, other exchanges and MIAX have rules that permit the 
aggregation of the trading activity of affiliated entities for the 
purposes of calculating and assessing certain fees.\13\ The Exchange 
believes that the opportunity for all such market participants to lower 
transaction fees by transacting greater Priority Customer order flow in 
turn benefits all market participants.
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    \13\ See, e.g., NASDAQ OMX PHLX LLC Pricing Schedule Preface; 
and Chicago Board Options Exchange, Incorporated, Fees Schedule, 
Footnote 10.
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    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.\14\
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    \14\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NYSE 
Amex Options Fee Schedule, p. 6; Chicago Board Options Exchange, 
Incorporated, Fees Schedule, p. 1; NASDAQ OMX BX Options Pricing 
Schedule, Section 2.
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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 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposal is 
similar to the 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 market participants. The proposal more closely aligns the fees for 
Public Customers that are not a Priority Customer, Non-MIAX Market 
Makers, Non-Member Broker-dealers and Firms on the Exchange to those of 
other exchanges for the same market participants. To the extent that 
there is additional competitive burden on non-Member market 
participants, the Exchange believes that this is appropriate because 
charging non-Members higher transaction fees is a common practice 
amongst exchanges, and because Members are subject to other fees and 
dues associated with their membership to the Exchange that do not apply 
to non-Members. 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,\15\ and Rule 19b-4(f)(2) \16\ thereunder. 
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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
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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-2015-70 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 79989]]

Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2015-70. 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-2015-70 and should be 
submitted on or before January 13, 2016.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-32188 Filed 12-22-15; 8:45 am]
BILLING CODE 8011-01-P