Document ID: SEC-2015-1177-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange LLC
Posted Date: 2015-07-15T04:00Z

[Federal Register Volume 80, Number 135 (Wednesday, July 15, 2015)]
[Notices]
[Pages 41530-41532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17296]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75408; File No. SR-MIAX-2015-45]

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

July 9, 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 July 7, 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 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 the Fee Schedule to modify the 
transaction fees for Members that participate in the price improvement 
auction (``PRIME Auction'' or ``PRIME'') pursuant to Rule 515A.\3\ 
Specifically, the Exchange proposes: (i) Increase the fee for a PRIME 
AOC Response from $0.45 per contract to $0.49 per contract for standard 
options in Penny Pilot classes; (ii) increase the fee for a PRIME AOC 
Response from $0.90 per contract to $0.94 per contract for standard 
options in non-Penny Pilot classes; and (iii) provide for additional 
incentives for achieving certain Priority Customer Rebate Program 
volume tiers.
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    \3\ See Exchange Rule 515A. See also Securities Exchange Act 
Release No.) 72943 (August 28, 2014), 79 FR 52785 (September 4, 
2014) (SR-MIAX-2014-45); MIAX Options Fee Schedule, Section 1)a)iv).
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    Currently, the Exchange assesses PRIME AOC Responses $0.45 per 
contract for standard options in Penny Pilot classes and $0.90 per 
contract in non-Penny Pilot classes. The Exchange now proposes to 
modify these fees that apply to PRIME AOC Responses. Specifically, the 
Exchange proposes: (i) Increase the fee for a PRIME AOC Response from 
$0.45 per contract to $0.49 per contract for standard options in Penny 
Pilot classes; and (ii) increase the fee for a PRIME AOC Response from 
$0.90 per contract to $0.94 per contract for standard options in non-
Penny Pilot classes. The Exchange will continue to assess the standard 
transaction fees to a PRIME AOC Response if they execute against 
unrelated orders.
    The Exchange proposes to offer Members that submit PRIME AOC 
Responses the opportunity to reduce transaction fees by $0.04 per 
contract in 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. 
Specifically, 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 a PRIME AOC Response fee of $0.45 per 
contract for standard options in Penny Pilot classes. In addition, any 
Member or its affiliates of at least 75% common ownership

[[Page 41531]]

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 a PRIME AOC Response fee of $0.90 per contract for 
standard options in non-Penny Pilot classes. The Exchange believes that 
these incentives will encourage Members to transact a greater number of 
contracts on the Exchange. The Exchange notes that these incentives 
will operate identically to the Priority Customer Rebate Program 
incentives that apply to 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 in other types of transaction fees.\4\
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    \4\ See MIAX Options Fee Schedule.
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    The Exchange proposes to implement the proposed changes beginning 
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 \5\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange's proposal to increase the transaction fees for 
Members that submit PRIME AOC Responses is reasonable because the 
Exchange's fees will remain competitive with fees at other options 
exchanges.\7\ The Exchange's proposal to increase the transaction fees 
for Members that submit PRIME AOC Responses is equitable and not 
unfairly discriminatory because the increase applies equally to all 
such market participants. The Exchange believes that the transaction 
fees for responding to the auction will not deter market participants 
from providing price improvement. In addition, the Exchange believes 
that it is reasonable to continue to assess lower transaction fees in 
penny option classes than non-penny option classes in a manner similar 
to the current fees.\8\
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    \7\ See e.g., NYSE Amex Options Fee Schedule; International 
Securities Exchange LLC Schedule of Fees; BOX Options Exchange Fee 
Schedule.
    \8\ See Securities Exchange Act Release No. 72989 (September 4, 
2014), 79 FR 53792 (September 10, 2014) (SR-MIAX-2014-47).
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    The Exchange's proposal to offer Members 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, that submit PRIME AOC Responses the 
opportunity to reduce transaction fees by $0.04 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 Members 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, 
that submit PRIME AOC Responses the opportunity to reduce transaction 
fees by $0.04 per contract in standard options, provided certain 
criteria are met, is equitable and not unfairly discriminatory because 
the Exchange will offer all market participants 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. To the extent that there is higher 
transaction fees assessed on market participants without Priority 
Customer order flow, the Exchange believes that this is appropriate 
because the proposal should incent Members to direct additional order 
flow to the Exchange and thus provide additional liquidity that 
enhances the quality of its markets and increases the volume of 
contracts traded here. To the extent that this purpose is achieved, all 
the Exchange's market participants should benefit from the improved 
market liquidity. 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 believes that the proposal to allow the aggregation of 
trading activity of separate Members or its 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 separate Members or its affiliates for purposes of the fee reduction 
only in very narrow circumstances, namely, where the firm is an 
affiliate, as defined herein. Furthermore, other exchanges, as well as 
MIAX, have rules that permit the aggregation of the trading activity of 
affiliated entities for the purposes of calculating and assessing 
certain fees. 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.

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 believes that the 
proposed change will enhance the competiveness of the Exchange relative 
to other exchanges that offer their own electronic crossing mechanism. 
The Exchange believes that the proposed fees are not going to have an 
impact on intra-market competition based on the total cost for 
participants to transact as respondents to the Auction as compared to 
the cost for participants to engage in non-Auction electronic 
transactions on the Exchange. As noted above, the Exchange believes 
that the proposed pricing for the PRIME Auction is comparable to that 
of other exchanges offering similar electronic price improvement 
mechanisms, and the Exchange believes that market participants 
understand that the price-improving benefits, based on their experience 
with electronic price improvement crossing mechanisms on other markets, 
offered by the Auction justify and offset the transaction costs 
associated with Auction. To the extent that there is a difference 
between non-Auction transactions fees and Auction transactions fees, 
the Exchange does not believe this difference will cause participants 
to refrain from responding to Auctions. In addition, the Exchange does 
not believe that the proposed transaction fees and credits burden 
competition by creating a disparity of transaction fees between the 
PRIME Order and the transaction fees that a responder pays would result 
in certain participants being unable to compete with the Contra-side 
Order. The Exchange expects to see robust competition within the PRIME 
Auction, despite the apparent differences in non-Auction fees versus 
Auction response fees.
    To the extent that there is additional competitive burden on market 
participants without Priority Customer order flow, the Exchange 
believes that this is appropriate because the proposal should incent 
Members to direct additional order flow to the Exchange and thus 
provide additional liquidity

[[Page 41532]]

that enhances the quality of its markets and increases the volume of 
contracts traded here. To the extent that this purpose is achieved, all 
the Exchange's market participants should benefit from the improved 
market liquidity. 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 to the 
Exchange. The Exchange believes that the proposed rule change reflects 
this competitive environment because it establishes a fee structure in 
a manner that encourages market participants to direct their order 
flow, to provide liquidity, and to attract additional transaction 
volume 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.\9\ 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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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2015-45 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-2015-45. 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-2015-45, and should be 
submitted on or before August 5, 2015.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-17296 Filed 7-14-15; 8:45 am]
 BILLING CODE 8011-01-P