Document ID: SEC-2014-1174-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2014-07-14T04:00Z

[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Notices]
[Pages 40807-40809]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16371]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72565; File No. SR-MIAX-2014-31]

Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Amend Its Fee Schedule Regarding the MIAX 
Market Maker Sliding Scale for Transaction Fees

July 8, 2014.
    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 25, 2014, 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 its 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

[[Page 40808]]

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 current MIAX Market Maker\3\ 
sliding scale for transaction fees to increase the volume thresholds of 
each tier.\4\
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    \3\ ``MIAX Market Maker'' for purposes of the proposed sliding 
scale means any MIAX Market Maker including RMM, LMM, PLMM, DLMM, 
and DPLMM.
    \4\ See Securities Exchange Act Release No. 71704 (March 12, 
2014), 79 FR 15183 (March 18, 2014) (SR-MIAX-2014-11).
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    The sliding scale for MIAX Market Maker transaction fees is based 
on the substantially similar fees of the Chicago Board Options 
Exchange, Incorporated (``CBOE'').\5\ Specifically, the program reduces 
a MIAX Market Maker's per contract transaction fee based on the number 
of contracts the MIAX Market Maker trades in a month, based on the 
following scale:
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    \5\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 57191 
(January 24, 2008), 73 FR 5611 (January 30, 2008); 58321 (August 6, 
2008), 73 FR 46955 (SR-CBOE-2008-78). See also CBOE Fees Schedule, 
p. 3.

----------------------------------------------------------------------------------------------------------------
                                                                                                Transaction fee
                              Tier                                    Contracts per month         per contract
----------------------------------------------------------------------------------------------------------------
1..............................................................                   1-1,000,000              $0.15
2..............................................................           1,000,001-2,000,000               0.10
3..............................................................           2,000,001-4,000,000               0.05
4..............................................................                    4,000,001+               0.03
----------------------------------------------------------------------------------------------------------------

    The sliding scale would apply to all MIAX Market Makers for 
transactions in all products except Mini Options. A MIAX Market Maker's 
initial $0.15 per contract rate will be reduced if the MIAX Market 
Maker reaches the volume thresholds set forth in the sliding scale in a 
month. As a MIAX Market Maker's monthly volume increases, its per 
contract transaction fee would decrease. Under the sliding scale, the 
first 1,000,000 contracts traded in a month would be assessed at $0.15 
per contract. The next 1,000,000 contracts traded (up to 2,000,000 
total contracts traded) would be assessed at $0.10 per contract. The 
next 2,000,000 contracts traded (up to 4,000,000 total contracts 
traded) would be assessed at $0.05 per contract. All contracts above 
4,000,000 contracts traded in a month would be assessed at $0.03 per 
contract. The Exchange will aggregate the trading activity of separate 
MIAX Market Maker firms for the purposes of the sliding scale if there 
is at least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A.\6\
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    \6\ A MIAX Market Maker's monthly contract volume would be 
determined at the firm affiliated level. E.g., if five MIAX Market 
Maker individuals are affiliated with member firm ABC as reflected 
by Exchange records for the entire month, all the volume from those 
five individual MIAX Market Makers will count towards firm ABC's 
sliding scale transaction fees for that month. CBOE also aggregates 
volume of market maker firms with at least 75% common ownership 
between the firms. See Securities Exchange Act Release No. 55193 
(January 30, 2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-
111). See also CBOE Fees Schedule, p. 3.
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    The Exchange believes the proposed sliding scale is objective in 
that the fee reductions are based solely on reaching stated volume 
thresholds. The specific volume thresholds of the tiers were set based 
upon business determinations and an analysis of current volume levels. 
The specific volume thresholds and rates were set in order to encourage 
MIAX Market Makers to reach for higher tiers. The Exchange believes 
that the proposed changes to the tiered fee schedule may incent firms 
to display their orders on the Exchange and increase the volume of 
contracts traded here.
    As mentioned above, the Exchange notes that the proposed sliding 
fee scale for MIAX Market Makers structured on contract volume 
thresholds is based on the substantially similar fees of the CBOE.\7\ 
The Exchange also notes that a number of other exchanges have tiered 
fee schedules which offer different transaction fee rates depending on 
the monthly ADV of liquidity providing executions on their 
facilities.\8\
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    \7\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 58321 
(August 6, 2008), 73 FR 46955 (SR-CBOE-2008-78); 71295 (January 14, 
2014), 79 FR 3443 (January 21, 2014) (SR-CBOE-2013-129).
    \8\ See, e.g., International Securities Exchange, LLC, Schedule 
of Fees, Section VI, C; NASDAQ Options Market, Chapter XV, Section 
2.
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    The proposed changes will become operative on July 1, 2014.
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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The proposed volume based discount fee structure is not 
discriminatory in that all MIAX Market Makers are eligible to submit 
(or not submit) liquidity, and may do so at their discretion in the 
daily volumes they choose during the course of the billing period. All 
similarly situated MIAX Market Makers are subject to the same fee 
structure, and access to the Exchange is offered on terms that are not 
unfairly discriminatory. Volume based discounts have been widely 
adopted by options and equities markets, and are equitable because they 
are open to all MIAX Market Makers on an equal basis and provide 
discounts that are reasonably related to the value of an exchange's 
market quality associated with higher volumes. The proposed fee levels 
and volume thresholds are reasonably designed to be comparable to those 
of other options exchanges employing similar fee programs, and also to 
attract additional liquidity and order flow to the Exchange.

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 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

[[Page 40809]]

Exchange believes that the proposed rule change reflects this 
competitive environment because it modifies the Exchange's fees in a 
manner that encourages market participants to provide liquidity and to 
send order flow 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.\11\ 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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    \11\ 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-2014-31 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-2014-31. 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-2014-31 and should be 
submitted on or before August 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16371 Filed 7-11-14; 8:45 am]
BILLING CODE 8011-01-P