Document ID: SEC-2016-1164-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2016-07-07T04:00Z

[Federal Register Volume 81, Number 130 (Thursday, July 7, 2016)]
[Notices]
[Pages 44390-44393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16122]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78222; File No. SR-MIAX-2016-18]

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

July 1, 2016.
    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 28, 2016, 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 and II 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 Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options Fee 
Schedule (``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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to clarify the 
circumstances that trigger the assessment of fees to, and billing of, 
Member or Non-Member users of the Exchange's System \3\ for certain 
non-transactional fees, as set forth below. The Exchange is not 
proposing any new fees that are not currently charged; the Exchange is 
simply proposing to clarify that the Exchange will assess the fees only 
when the Member or Non-Member user is credentialed (as defined below) 
to use the System in the production environment, thus ensuring that 
Member and Non-Member users of the System are not billed unnecessarily 
before they are ready to begin using the System. The Exchange is also 
proposing several technical clarifying amendments to the Fee Schedule 
as described below.
---------------------------------------------------------------------------

    \3\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
---------------------------------------------------------------------------

    New users of the System (and existing users of the System that seek 
to add connectivity) require testing and certification prior to actual 
use in the production environment. It has been the Exchange's 
experience that such users frequently must engage in internal business 
and technological decision-making and production processes that extend 
beyond the timing of their application, testing and certification with 
the Exchange for use of the System in the production environment. In 
order to ensure that Member and Non-Member users of the System are not 
assessed fees and billed unnecessarily during this time, the Exchange 
is proposing the below changes to the Fee Schedule relating to the 
timing of such assessment and billing.
    The Exchange proposes to amend Section 3)a) of the Fee Schedule to 
provide that MIAX will assess a one-time Membership Application Fee on 
the earlier of (i) the date the applicant is certified in the 
membership system, or (ii) once an application for MIAX membership is 
finally denied.
    The Exchange also proposes to amend Section 3)b) of the Fee 
Schedule to provide that Monthly Trading Permit Fees will be assessed 
with respect to Electronic Exchange Members (``EEMs'') \4\ (other than 
Clearing Firms) in any month the EEM is certified in the membership 
system and the EEM is authorized by the Exchange (hereinafter, 
``credentialed'') to use one or more Financial Information Exchange 
(``FIX'') Ports \5\ in the production environment. Further, the 
Exchange proposes that Monthly Trading Permit Fees will be assessed 
with respect to EEM-Clearing Firms in any month the Clearing Firm is 
certified in the membership system to clear transactions on the 
Exchange. Finally, the Exchange proposes that Monthly Trading Permit 
Fees will be assessed with respect to Market Makers in any month the 
Market Maker is certified in the membership system, is credentialed to 
use one or more MIAX Express Interface (``MEI'') \6\ Ports in the 
production environment and is assigned to quote in one or more 
classes.\7\
---------------------------------------------------------------------------

    \4\ 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.
    \5\ A FIX Port is an interface with MIAX systems that enables 
the Port user (typically an Electronic Exchange Member or a Market 
Maker) to submit orders electronically to MIAX.
    \6\ MIAX Express Interface is a connection to MIAX systems that 
enables Market Makers to submit electronic quotes to MIAX.
    \7\ The calculation of the Trading Permit Fee for the first 
month in which the Trading Permit is issued will be pro-rated based 
on the number of trading days on which the Trading Permit was in 
effect divided by the total number of trading days in that month 
multiplied by the monthly rate.
---------------------------------------------------------------------------

    The Exchange also proposes to amend Section 4)a) of the Fee 
Schedule to state that Application Programming Interface (``API'') 
Testing and Certification Fees for EEMs (other than Clearing Firms) 
will be assessed (i) initially per API for FIX, FIX Drop Copy (``FXD'') 
\8\ and Clearing Trade Drop (``CTD'') \9\ in the month the EEM has been 
credentialed to use one or more ports in the production

[[Page 44391]]

environment for the tested API,\10\ and (ii) each time an EEM initiates 
a change to its system that requires testing and certification. The 
Exchange further proposes that API Testing and Certification Fees for 
EEM-Clearing Firms will be assessed (i) initially per API in the month 
the EEM-Clearing Firm has been credentialed to use one or more CTD 
ports in the production environment, and (ii) each time an EEM-Clearing 
Firm initiates a change to its system that requires testing and 
certification. The Exchange additionally proposes that API Testing and 
Certification Fees for Market Makers will be assessed (i) initially per 
API for CTD and MEI \11\ in the month the Market Maker has been 
credentialed to use one or more ports in the production environment for 
the tested API and the Market Maker has been assigned to quote in one 
or more classes, and (ii) each time a Market Maker initiates a change 
to its system that requires testing and certification. Consistent with 
the current practice, such fees will not be assessed in situations 
where the Exchange initiates a change to its System requiring testing 
and certification by Members of the Exchange. The Exchange is proposing 
to clarify that the fees will not be assessed when the Exchange-
initiated change is mandatory.
---------------------------------------------------------------------------

    \8\ The FIX Drop Copy Port is a messaging interface that will 
provide a copy of real-time trade execution, trade correction and 
trade cancellation information to FIX Drop Copy Port users who 
subscribe to the service.
    \9\ CTD provides Exchange members with real-time clearing trade 
updates. The updates include the member's clearing trade messages on 
a low latency, real-time basis. The trade messages are routed to a 
member's connection containing certain information. The information 
includes, among other things, the following: (i) Trade date and 
time; (ii) symbol information; (iii) trade price/size information; 
(iv) member type (for example, and without limitation, Market Maker, 
Electronic Exchange Member, Broker-Dealer); and (v) Exchange Member 
Participant Identifier (``MPID'') for each side of the transaction, 
including clearing member MPID.
    \10\ FIX, FXD and CTD are types of APIs.
    \11\ MEI is a type of API.
---------------------------------------------------------------------------

    The Exchange also proposes to amend Section 4)b) of the Fee 
Schedule to provide that API Testing and Certification Fees for Third 
Party Vendors, Service Bureaus and other non-Members will be assessed 
(i) initially per API for FIX, FXD, CTD and MEI in the month the Non-
Member has been credentialed to use one or more ports in the production 
environment for the tested API, and (ii) each time a Third Party 
Vendor, Service Bureau, or other non-Member initiates a change to its 
system that requires testing and certification. The Exchange also 
proposes that such fees will not be assessed in situations where the 
Exchange initiates a mandatory change to its System requiring testing 
and certification by Non-Members of the Exchange.
    The Exchange additionally proposes to amend Section 4)(c) of the 
Fee Schedule to provide that Member Network Connectivity Testing and 
Certification Fees will be assessed (i) initially per connection in the 
month the Individual Firm has been credentialed to use any API or 
Market Data feeds in the production environment utilizing the tested 
network connection, and (ii) each time an Individual Firm initiates a 
change to its system that requires network connectivity testing and 
certification. The Exchange also proposes that such fees will not be 
assessed in situations where the Exchange initiates a mandatory change 
to its System requiring testing and certification by Members of the 
Exchange.
    The Exchange proposes to amend Section 4)d) of the Fee Schedule to 
provide that Non-Member Network Connectivity Testing and Certification 
Fees will be assessed (i) initially per connection in the month the 
Service Bureau, Extranet Provider or other Non-Member has been 
credentialed to use any API or Market Data feeds in the production 
environment using the tested network connection, and (ii) each time a 
Service Bureau, Extranet Provider or other non-Member initiates a 
change to its system that requires network connectivity testing and 
certification. The Exchange also proposes that such fees will not be 
assessed in situations where the Exchange initiates a mandatory change 
to its System requiring testing and certification by Members of the 
Exchange.
    The Exchange proposes to amend Section 5)a) of the Fee Schedule to 
provide that Monthly Member Network Connectivity Fees for the 
applicable connectivity will be assessed in any month the Member is 
credentialed to use any of the MIAX APIs or Market Data feeds in the 
production environment and will be pro-rated when a Member makes a 
change to the connectivity (by adding or deleting connections) with 
such pro-rated fees based on the number of trading days that the Member 
has been credentialed to use any of the MIAX APIs or Market Data feeds 
in the production environment through such connection, divided by the 
total number of trading days in such month multiplied by the applicable 
monthly rate.
    The Exchange proposes to amend Section 5)b) of the Fee Schedule to 
provide that Monthly Non-Member Network Connectivity Fees for the 
applicable connectivity will be assessed in each month the Non-Member 
has been credentialed to use any of the MIAX APIs or Market Data feeds 
in the production environment and will be pro-rated when a Non-Member 
makes a change to the connectivity (by adding or deleting connections) 
with such pro-rated fees based on the number of trading days that the 
Non-Member has been credentialed to use any of the MIAX APIs or Market 
Data feeds via the network connection in the production environment 
through such connection, divided by the total number of trading days in 
such month multiplied by the applicable monthly rate.
    The Exchange proposes to amend Section 5)d)i) of the Fee Schedule 
to provide that MIAX will assess monthly FIX Port Fees on Members in 
each month the Member is credentialed to use a FIX Port in the 
production environment and based upon the number of credentialed FIX 
Ports.
    The Exchange further proposes to amend Section 5)d)ii) of the Fee 
Schedule to provide that MIAX will assess monthly MEI Port Fees on 
Market Makers in each month the Member has been credentialed to use the 
MEI Port in the production environment and has been assigned to quote 
in at least one class. The amount of the monthly MEI Port Fee will be 
based upon the number of classes in which the Market Maker was assigned 
to quote in any given day within the calendar month, and upon the class 
volume percentages set forth in the MEI Port Fee table in Section 
5)d)ii). The class volume percentage is based on the total national 
average daily volume in classes listed on MIAX in the prior calendar 
quarter.
    The Exchange also proposes to amend Section 5)d)iii) of the Fee 
Schedule to provide that CTD Port Fees will be assessed in any month 
the Member is credentialed to use the CTD Port in the production 
environment.
    The Exchange also proposes to amend Section 5)d)iv) of the Fee 
Schedule to provide that FXD Port Fees will be assessed in any month 
the Member is credentialed to use the FXD Port in the production 
environment.
    The Exchange proposes to amend Section 5)e) of the Fee Schedule to 
provide that MIAX Member Participant Identifier (``MPID'') Fees will be 
assessed in each month the Member is credentialed to use such MPIDs in 
the production environment.
    The Exchange additionally proposes to amend Section 6 of the Fee 
Schedule to provide that, with respect to each of the Exchange's data 
feeds including MIAX Top of Market (``ToM''), Administrative 
Information Subscriber (``AIS'') and MIAX Order Feed (``MOR''), MIAX 
will assess Market Data Fees applicable to such data feed on Internal 
and External Distributors in each month the Distributor is credentialed 
to use such data feed in the production environment.
    The purpose of the proposed rule change is to provide all users of 
the Exchange with greater transparency as to when non-transactional 
fees will be assessed to such users. The Exchange believes that 
defining the timing in the Fee Schedule will benefit all market

[[Page 44392]]

participants by assisting them in the decision-making process for the 
timing of their readiness to use the Exchange's System. Moreover, 
establishing in the fee schedule the timing of certain non-transaction 
fees enhances transparency on the Exchange and lets all market 
participants know that they will not be assessed such fees until such 
time as they are credentialed to use and avail themselves of the 
Exchange's System.
    The Exchange is also proposing minor technical amendments to the 
Fee Schedule throughout the Fee Schedule (e.g., replacing the term 
``MM'' with the term ``Market Maker'' and capitalizing the word 
``Member'') to make consistent defined terms used throughout the Fee 
Schedule. These changes are intended for clarity and ease of reference.
    The proposed rule change will become effective July 1, 2016.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \12\ in general, and furthers the 
objectives of Sections 6(b)(4) of the Act,\13\ in that it is an 
equitable allocation of reasonable fees and other charges among 
Exchange Members and other persons using its facilities, and Section 
6(b)(5) of the Act,\14\ in that it is designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanisms of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change furthers the objectives of Section 6(b)(4) 
of the Act \15\ because it will apply equally to all MIAX participants 
within the various categories set forth in the proposed rule change. 
The Exchange further believes that it is equitable and reasonable to 
amend the Fee Schedule to charge participants for these non-transaction 
fees only when they are credentialed to use the facilities of the 
Exchange, and not before that time.
---------------------------------------------------------------------------

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

    The proposed rule change is consistent with Section 6(b)(5) of the 
Act,\16\ in that it is designed to protect investors and the public 
interest and to promote just and equitable principles of trade by 
adding transparency to the Exchange's marketplace and by broadening the 
description of non-transactional fees to include the timing of 
assessment of such fees, and by ensuring that these fees will only be 
assessed on MIAX participants when they are credentialed to use the 
facilities of the Exchange.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed changes would increase both intermarket and intramarket 
competition by defining the timing of non-transactional fee assessments 
for all users of the Exchange, thereby creating greater clarity around 
the Exchange's assessment of such fees for participants that wish to 
begin and continue using the Exchange's facilities, and enabling them 
to assess the competitive nature of the fees. This should 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 and rebates 
to remain competitive with other exchanges and to attract order flow to 
the Exchange. The Exchange believes that the proposal will enhance 
competition, because market participants will have more clarity 
surrounding when they will be assessed non-transactional fees and will 
also understand that they will not be assessed such fees until such 
time as they are ready to use 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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate, it has become effective 
pursuant to 19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) \18\ 
thereunder.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally 
does not become operative for 30 days after the date of filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\20\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative by July 1, 2016. The Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest because it will allow the Exchange to 
clarify the circumstances that trigger the assessment of fees to, and 
billing of Member and Non-Member users of the Exchange's System so as 
to assess existing non-transactional fees only on Member and Non-Member 
users that are credentialed to use the System. The Commission notes 
that the Exchange is not proposing any new fees, but is clarifying that 
the Exchange will only assess certain non-transaction fees when the 
Member or non-Member user is credentialed to use the Exchange's system. 
Thus, the proposed rule change which will ensure that users will not be 
billed until they are ready to begin using the Exchange system. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposed rule change as operative upon filing.\21\
---------------------------------------------------------------------------

    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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

[[Page 44393]]

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-2016-18 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-MIAX-2016-18. 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-2016-18, and should be 
submitted on or before July 28, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-16122 Filed 7-6-16; 8:45 am]
 BILLING CODE 8011-01-P