Document ID: SEC-2014-0424-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2014-03-14T04:00Z

[Federal Register Volume 79, Number 50 (Friday, March 14, 2014)]
[Notices]
[Pages 14562-14563]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-05595]

[[Page 14562]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71672; File No. SR-MIAX-2014-10]

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

March 10, 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 February 27, 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 the 
Substance of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Option Fee 
Schedule (``Fee Schedule'') to specify the frequency with which the 
Exchange may change the Options Regulatory Fee (``ORF'').\3\
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    \3\ The Commission notes that MIAX also is proposing to increase 
the ORF from $0.0040 per contract to $0.0045 per contract.
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    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 (i) to increase the 
ORF from $0.0040 per contract to $0.0045 per contract; and (ii) to 
specify the frequency with which the Exchange may change the ORF. The 
Exchange proposes to increase the ORF in light of increased regulatory 
costs and expected volume levels in 2014. The filing is based on the 
substantially similar filings filed by NYSE Arca, Inc and NYSE MKT 
LLC.\4\ The proposed fee change would be operative on April 1, 2014.
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    \4\ See Securities Exchange Act Release Nos. 70500 (September 
25, 2013), 78 FR 60361 (October 1, 2013) (SR-NYSEArca-2013-91); 
70499 (September 25, 2013), 78 FR 60362 (October 1, 2013) (SR-
NYSEMKT-2013-76).
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    The Exchange proposes to increase the ORF from $0.0040 per contract 
to $0.0045 per contract in light of increased regulatory costs and 
expected volume levels in 2014. The ORF is assessed by the Exchange on 
each Member for all options transactions executed or cleared by the 
Member that are cleared by The Options Clearing Corporation (``OCC'') 
in the customer range (i.e., transactions that clear in the customer 
account of the Member's clearing firm at OCC) regardless of the 
exchange on which the transaction occurs. The fee is collected 
indirectly from Members through their clearing firms by OCC on behalf 
of the Exchange. The dues and fees paid by Members go into the general 
funds of the Exchange, a portion of which is used to help pay the costs 
of regulation. The ORF is designed to recover a material portion of the 
costs to the Exchange of the supervision and regulation of Member 
customer options business, including performing routine surveillances, 
investigations, examinations, financial monitoring, as well as policy, 
rulemaking, interpretive and enforcement activities. The Exchange 
believes that revenue generated from the ORF, when combined with all of 
the Exchange's other regulatory fees and fines, will cover a material 
portion, but not all, of the Exchange's regulatory costs. The Exchange 
notes that its regulatory responsibilities with respect to Member 
compliance with options sales practice rules have largely been 
allocated to FINRA under a 17d-2 agreement. The ORF is not designed to 
cover the cost of that options sales practice regulation. The Exchange 
will continue to monitor the amount of revenue collected from the ORF 
to ensure that it, in combination with its other regulatory fees and 
fines, does not exceed the Exchange's total regulatory costs. If the 
Exchange determines regulatory revenues exceed regulatory costs, the 
Exchange will adjust the ORF by submitting a fee change filing to the 
Commission.
    In response to industry feedback requesting greater certainty as to 
when ORF changes may occur, the Exchange proposes to specify in the Fee 
Schedule that the Exchange may only increase or decrease the ORF semi-
annually, and any such fee change will be effective on the first 
business day of February or August. In addition to submitting a 
proposed rule change to the Commission as required by the Act to 
increase or decrease the ORF, the Exchange will notify participants via 
a Regulatory Circular of any anticipated change in the amount of the 
fee at least 30 calendar days prior to the effective date of the 
change. The Exchange believes that by providing guidance on the timing 
of any changes to the ORF, the Exchange would make it easier for 
participants to ensure their systems are configured to properly account 
for the ORF.
    The proposed change is not intended to address any other issues, 
and the Exchange is not aware of any problems that Members would have 
in complying with the proposed change.
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 believes the proposed fee change is reasonable because 
it would help the Exchange offset increased regulatory expenses, but 
would not result in total regulatory revenue exceeding total regulatory 
costs. Moreover, the Exchange believes the ORF ensures fairness by 
assessing higher fees to those Members that require more Exchange 
regulatory services based on the amount of customer options business 
they conduct. Regulating customer trading activity is much more labor 
intensive and requires greater expenditure of human and technical 
resources than regulating non-customer trading activity, which tends to 
be more automated and less labor-intensive. As a result, the costs 
associated with

[[Page 14563]]

administering the customer component of the Exchange's overall 
regulatory program are materially higher than the costs associated with 
administering the noncustomer component (e.g., Member proprietary 
transactions) of its regulatory program. The Exchange believes that the 
proposed change to limit changes to the ORF to twice a year on specific 
dates with advance notice is reasonable because it will give 
participants certainty on the timing of changes, if any, and better 
enable them to properly account for ORF charges among their customers. 
The Exchange believes that the proposed change is equitable and not 
unfairly discriminatory because it will apply in the same manner to all 
Members that are subject to the ORF and provide them with additional 
advance notice of changes to that fee.

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 proposed change is not 
intended to address a competitive issue but rather to provide Members 
with better notice of any change that the Exchange may make to the ORF. 
In any event, because competitors are free to modify their own fees and 
credits in response, and because market participants may readily adjust 
their trading practices, the Exchange believes that the degree to which 
fee or credit changes in this market may impose any burden on 
competition is extremely limited. As a result of all of these 
considerations, the Exchange does not believe that the proposed change 
will impair the ability of Members or competing order execution venues 
to maintain their competitive standing in the financial markets.

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.\7\ 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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    \7\ 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-2014-10 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-2014-10. 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-2014-10, and should be 
submitted on or before April 4, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-05595 Filed 3-13-14; 8:45 am]
BILLING CODE 8011-01-P