Document ID: SEC-2022-0484-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX, LLC
Posted Date: 2022-04-08T04:00Z

[Federal Register Volume 87, Number 68 (Friday, April 8, 2022)]
[Notices]
[Pages 20892-20894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07467]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94590; File No. SR-MEMX-2022-06]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule Concerning Volume Calculations for Transaction 
Pricing Tiers

April 4, 2022.
    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 March 31, 2022, 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 implement the changes to the Fee Schedule pursuant 
to this proposal on April 1, 2022. 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.

[[Page 20893]]

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 exclude any days that the MSCI Equity Indexes and the S&P 
400, S&P 500, and S&P 600 Indexes are rebalanced from the volume 
calculations used by the Exchange for purposes of determining a 
Member's qualification for the Exchange's transaction pricing tiers/
incentives. Currently, the Exchange's Fee Schedule includes a note 
stating that the Exchange excludes from its calculations of ADAV,\4\ 
ADV \5\ and TCV,\6\ and for purposes of determining qualification for 
the Displayed Liquidity Incentive: (1) Any trading day that the 
Exchange's system experiences a disruption that lasts for more than 60 
minutes during regular trading hours; and (2) the day that Russell 
Investments reconstitutes its family of indexes (i.e., the last Friday 
in June). Now, the Exchange proposes to include in this list of days 
excluded from such calculations any day that the MSCI Equities Indexes 
are rebalanced (``MSCI Rebalance Day''), which occur on a quarterly 
basis each year, and any day that the S&P 400, S&P 500, and S&P 600 
Indexes are rebalanced (``S&P Rebalance Day''), which also occur on a 
quarterly basis each year.
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    \4\ As set forth on the Fee Schedule, ``ADAV'' means average 
daily added volume calculated as the number of shares added per day, 
which is calculated on a monthly basis.
    \5\ As set forth on the Fee Schedule, ``ADV'' means average 
daily volume calculated as the number of shares added or removed, 
combined, per day, which is calculated on a monthly basis.
    \6\ As set forth on the Fee Schedule, ``TCV'' means total 
consolidated volume calculated as the volume reported by all 
exchanges and trade reporting facilities to a consolidated 
transaction reporting plan for the month for which the fees apply.
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    For the same reasons that the Exchange currently excludes the day 
that Russell Investments reconstitutes its family of indexes (``Russell 
Reconstitution Day'') from these calculations,\7\ the Exchange believes 
it is appropriate to exclude MSCI Rebalance Days and S&P Rebalance Days 
from these calculations in the same manner, as such days typically have 
extraordinarily high and/or abnormally distributed trading volumes, 
which the Exchange believes is attributed to market participants who 
are not generally as active entering the market to rebalance their 
holdings in-line with these rebalances, and the Exchange believes this 
change to normal activity may affect a Member's ability to meet the 
applicable volume thresholds under its volume-based tiers, as well as 
the daily quoting requirements under the Displayed Liquidity Incentive. 
The Exchange notes that the proposed exclusion of MSCI Rebalance Days 
and S&P Rebalance Days from the relevant calculations would be applied 
in the same manner that the Exchange currently excludes system 
disruption days and the Russell Reconstitution Day from such 
calculations.
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    \7\ See Securities Exchange Act Release No. 92150 (June 10, 
2021), 86 FR 32090, 32092 (June 16, 2021) (SR-MEMX-2021-07).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\8\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\9\ in particular, in that it 
provides 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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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed rule change is reasonable 
and appropriate because, as described above, MSCI Rebalance Days and 
S&P Rebalance Days typically have extraordinarily high and/or 
abnormally distributed trading volumes which, in turn, may affect a 
Member's ability to meet the applicable volume thresholds and/or daily 
quoting requirements under its transaction pricing tiers/incentives, 
and the Exchange believes that excluding such days from the relevant 
calculations for purposes of determining a Member's qualification for 
such tiers/incentives would help to avoid penalizing Members that might 
otherwise have met the requirements to qualify for such tiers/
incentives due to abnormal market conditions. Additionally, the 
Exchange believes that the proposed rule change is equitable and not 
unfairly discriminatory because it will apply to all Members uniformly, 
in that each Member's volume and quoting activities for purposes of 
pricing tiers/incentives would continue to be calculated in a uniform 
manner and would now exclude MSCI Rebalance Days and S&P Rebalance 
Days.
    For the reasons discussed above, the Exchange submits that the 
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of 
the Act \10\ in that it provides 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 unfairly 
discriminate between customers, issuers, brokers, or dealers.
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    \10\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposal will result in any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. Rather, as described above, the 
proposed change is intended to avoid penalizing Members that might 
otherwise have met the applicable volume thresholds and/or quoting 
requirements to qualify for the Exchange's transaction pricing tiers/
incentives due to the abnormal trading volumes and market conditions 
typically experienced in the equities markets on MSCI Rebalance Days 
and S&P Rebalance Days. The Exchange does not believe the proposal 
would impose any burden on intermarket competition that is not 
necessary or appropriate in furtherance of the purposes of the Act, as 
the Exchange believes the proposal is not concerned with competitive 
issues, but rather relates to calculation methodologies applicable to 
its pricing tiers/incentives. Additionally, the Exchange believes the 
proposal would not impose any burden on intramarket competition that is 
not necessary or appropriate in furtherance of the purposes of the Act 
because, as described above, the proposed exclusion of MSCI Rebalance 
Days and S&P Rebalance Days from the relevant calculations will apply 
to all Members uniformly and in the same manner that the Exchange 
currently excludes system disruption days and the Russell 
Reconstitution Day from such calculations.

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 \11\ and Rule 19b-4(f)(2) \12\ thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 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

[[Page 20894]]

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-MEMX-2022-06 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-2022-06. 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 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.
    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-2022-06 
and should be submitted on or before April 29, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-07467 Filed 4-7-22; 8:45 am]
BILLING CODE 8011-01-P