Document ID: SEC-2023-1189-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: MEMX LLC
Posted Date: 2023-10-13T04:00Z

[Federal Register Volume 88, Number 197 (Friday, October 13, 2023)]
[Notices]
[Pages 71063-71065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22610]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98701; File No. SR-MEMX-2023-27]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule

October 6, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on September 29, 2023, 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\ 15 U.S.C. 78a.
    \3\ 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 \4\ (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 immediately. The text of the proposed rule change is 
provided in Exhibit 5.
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    \4\ See Exchange Rule 1.5(p).
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II. Self-Regulatory Organization's Statement of the Purpose of, and the 
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 purpose of the proposed rule change is to amend the Fee 
Schedule to add clarifying language to the MEMX Equities Liquidity 
Provision Tiers. The Exchange notes that certain criteria of Liquidity 
Provision Tier 4 \5\ (namely, criteria (2)),\6\ will expire no later 
than

[[Page 71064]]

October 31, 2023 and Liquidity Provision Tier 6 \7\ will expire no 
later than November 30, 2023. As described below, the Exchange wishes 
to add language clarifying the applicability of other language on the 
Fee Schedule to such Tiers in light of their expiration. The Exchange 
does not propose to change the rebates offered to Members under 
Liquidity Provision Tier 4 or Liquidity Provision Tier 6, nor does the 
Exchange propose to change the criteria under such tiers. Rather, the 
Exchange wishes to make clear which months Members are eligible for 
such tiers.
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    \5\ The pricing for Liquidity Provision Tier 4 is referred to by 
the Exchange on the Fee Schedule under the existing description 
``Added displayed volume, Liquidity Provision Tier 4'' with a Fee 
Code of ``B4'', ``D4'' or ``J4'', as applicable, to be provided by 
the Exchange on the monthly invoices provided to Members.
    \6\ This criteria provides that a Member may qualify for 
Liquidity Provision Tier 4 by achieving a Displayed ADAV that is 
equal to or greater than 0.02% of the TCV and a Step-Up Displayed 
ADAV of the TCV from April 2023 that is equal to or greater than 50% 
of the Member's April 2023 Displayed ADAV of the TCV. As set forth 
on the Fee Schedule, ``Displayed ADAV'' means ADAV with respect to 
displayed orders. ``ADAV'' means the average daily added volume 
calculated as the number of shares added per day, which is 
calculated on a monthly basis. ``Step-Up Displayed ADAV'' means 
Displayed ADAV in the relevant baseline month subtracted from 
current Displayed ADAV. ``TCV'' is 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. See also the Exchange's Fee 
Schedule (available at https://info.memxtrading.com/fee-schedule/).
    \7\ The pricing for Liquidity Provision Tier 6 is referred to by 
the Exchange on the Fee Schedule under the existing description 
``Added displayed volume, Liquidity Provision Tier 6'' with a Fee 
Code of ``B6'', ``D6'' or ``J6'', as applicable, to be provided by 
the Exchange on the monthly invoices provided to Members.
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    The Liquidity Provision Tiers section of the Fee Schedule contains 
the following language in the first footnote (denoted by ``*''): 
``Members that qualify for Tier 4, 5, or 6 based on activity in a given 
month will also receive the associated Tier 4, 5, or 6 rebate during 
the following month.'' The second footnote (denoted by ``**'') of the 
Liquidity Provision Tiers section of the Fee Schedule provides that 
Criteria 2 of Liquidity Provision Tier 4 will expire no later than 
October 31, 2023. The third footnote (denoted by ``***'') of the 
Liquidity Provision Tiers section of the Fee Schedule provides that 
Liquidity Provision Tier 6 will expire no later than November 30, 2023. 
The Exchange now proposes to add clarifying language to the second and 
third footnote of the Liquidity Provision Tiers section, in order to 
make it more clear to Members that the months in which they are 
eligible to qualify for either (i) Liquidity Provision Tier 4 rebates 
based upon Criteria (2) of such tier, or (ii) Liquidity Provision Tier 
6 rebates.
Clarify Liquidity Provision Tier 4 Criteria (2)
    Currently, the second footnote of the Liquidity Provision Tiers 
section of the Fee Schedule states that ``Criteria (2) of Liquidity 
Provision Tier 4 will expire no later than October 31, 2023''. The 
Exchange wishes to clarify that, since Criteria (2) of Liquidity 
Provision 4 will expire on October 31, 2023, a Member's activity during 
the month of October will not qualify such Member for the Liquidity 
Provision 4 rebate in the following month if the Member qualifies for 
the tier based on Criteria (2). Thus, a Member qualifying based on 
Criteria (2) will not qualify for the Liquidity Provision 4 rebate in 
November based on October activity, because Criteria (2) expires as of 
October 31. The Exchange now proposes to amend the second footnote of 
the Liquidity Provision Tiers section to add the following sentence: 
``Due to the expiration of Criteria (2), Members that qualify for Tier 
4 based on activity meeting Criteria (2) in October 2023 will not 
receive the Liquidity Provision Tier 4 rebate during the following 
month.'' The Exchange wishes to make clear that, while a Member whose 
October activity meets Tier 4 via Criteria (2) would be eligible to 
receive Tier 4 rebates in October, such Member is not eligible to 
qualify for the Tier 4 rebate in the following month (November 2023) 
based on October activity. As noted above, the Exchange does not 
propose to change the Tier 4 rebate, nor does the Exchange propose to 
modify the criteria to achieve such rebate. The Exchange believes that 
this proposed clarifying language will provide Members with additional 
certainty when trading on the Exchange, which in turn, will incentivize 
Members to achieve certain volume thresholds on the Exchange on an 
ongoing basis.
Clarify Liquidity Provision Tier 6
    Currently, the third footnote of the Liquidity Provision Tiers 
section of the Fee Schedule states that ``Liquidity Provision Tier 6 
will expire no later than November 30, 2023.'' The Exchange wishes to 
clarify that, since Liquidity Provision 6 will expire on November 30, 
2023, a Member's activity during the month of November will not qualify 
such Member for the Liquidity Provision 6 rebate in the following 
month. Thus, a Member's activity in November will not qualify the 
Member for the Liquidity Provision 6 rebate in December based on 
November activity, because Criteria (2) expires as of November 30. The 
Exchange now proposes to amend the third footnote to add the following 
sentence: ``Due to the expiration of Tier 6, Members that qualify for 
Tier 6 based on activity in November 2023, will not receive the 
Liquidity Provision Tier 6 rebate during the following month.'' The 
Exchange wishes to make clear that, while a Member who qualifies for 
Tier 6 rebates based upon November activity would be eligible to 
receive Tier 6 rebates in November 2023, such Member would not qualify 
for Tier 6 rebates in the following month (December 2023) based on 
November activity. As noted above, the Exchange does not propose to 
change the Tier 6 rebate, nor does the Exchange propose to modify the 
criteria to achieve such rebate. The Exchange believes that this 
proposed clarifying language will provide Members with additional 
certainty when trading on the Exchange, which in turn, will incentivize 
Members to achieve certain volume thresholds on the Exchange on an 
ongoing basis.
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 notes that volume-based incentives (such as Liquidity 
Provision Tiers) have been widely adopted by exchanges (including the 
Exchange), and are reasonable, equitable, and not unfairly 
discriminatory because they are open to all members on an equal basis 
and provide additional benefits or discount that are reasonably related 
to the value to an exchange's market quality associated with higher 
levels of market activity, such as higher levels of liquidity provision 
and/or growth patterns, and the introduction of higher volumes of 
orders into the price and volume discovery process.
    The Exchange believes the proposed clarifying language to the 
second and third footnotes in the Liquidity Provision Tiers section of 
the Fee Schedule is reasonable because it is designed to avoid 
confusion in reading the Fee Schedule. The Liquidity Provision Tiers 
continue to provide Members with incremental incentives to achieve 
certain volume thresholds on the Exchange, are available to all Members 
on an equal basis, and, as described above, are reasonably designed to 
encourage Members to maintain or increase their order flow to the 
Exchange. The Exchange believes that the proposed clarifying language 
will provide Members with an added layer of certainty with respect to 
the expiring Tiers, namely Liquidity Provision Tier 4 Criteria (2) and 
Liquidity Provision Tier 6.
    The Exchange also believes the proposed change is equitable and not 
unfairly discriminatory because it will apply equally to all Members 
and

[[Page 71065]]

because the opportunity to qualify for Liquidity Provision Tiers is 
open to all members on an equal basis. Upon the expiration of Liquidity 
Provision Tier 4 Criteria (2) for activity on the Exchange after 
October 31, 2023, no Member will be able to qualify for Liquidity 
Provision Tier 4 based on Criteria (2). Similarly, upon the expiration 
of Liquidity Provision Tier 6 for activity on the Exchange after 
November 30, 2023, no Member will be able to qualify for Liquidity 
Provision Tier 6.
    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 provide clear and easy-to-understand 
language in its Fee Schedule related to the expiring Tiers, as 
described above. The Exchange believes that providing clarifying 
language enables Members to make better decisions about where to route 
their orders and would enable the Exchange to better compete with other 
exchanges that offer similar pricing structures and incentives to 
market participants.
    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 clarifying the applicability of certain expiring Tiers, as described 
above. 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 changes will apply to all Members 
uniformly and in the same manner.

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 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MEMX-2023-27 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-2023-27. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-MEMX-2023-27 and should be 
submitted on or before November 3, 2023.

    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. Lynn Taylor,
Assistant Secretary.
[FR Doc. 2023-22610 Filed 10-12-23; 8:45 am]
BILLING CODE 8011-01-P