Document ID: SEC-2019-0563-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange, LLC
Posted Date: 2019-04-24T04:00Z

[Federal Register Volume 84, Number 79 (Wednesday, April 24, 2019)]
[Notices]
[Pages 17207-17212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08211]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85693; File No. SR-MIAX-2019-20]

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

April 18, 2019.
    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 April 11, 2019, Miami International Securities 
Exchange LLC (``MIAX Options'' 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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[[Page 17208]]

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 (the ``Fee Schedule'') to adjust and adopt certain SPIKES 
transaction fees. The Exchange initially filed the proposal on March 
29, 2019 (SR-MIAX-2019-18). That filing has been withdrawn and replaced 
with the current filing (SR-MIAX-2019-20).
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings, 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 adopted its initial SPIKES transaction fees on 
February 15, 2019.\3\ The Exchange now proposes to amend the Fee 
Schedule to adjust and adopt certain SPIKES transaction fees. 
Specifically, the Exchange proposes to (i) adopt new fees for SPIKES 
Combinations; \4\ (ii) change the complex fees so that complex orders 
are charged the same fees as simple orders of the same Origin (and 
combined in the same fee table), using the simple maker and taker fee 
structure already in place; (iii) adjust the number of contracts in the 
Simple Large Trade Discount Threshold, adjust the number of contracts 
in the Complex Large Trade Discount Threshold, and create a new, stand-
alone column in the table for the Complex Large Trade Discount; (iv) 
establish a new PRIME Large Trade Discount and a new cPRIME Large Trade 
Discount; and (v) make a non-substantive, technical change to the Fee 
Schedule.
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    \3\ See Securities Exchange Release No. 85283 (March 11, 2019), 
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). (The Exchange 
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04). 
That filing was withdrawn and replaced with (SR-MIAX-2019-11)).
    \4\ A ``Combination'' is a purchase (sale) of a SPIKES call 
option and the sale (purchase) of a SPIKES put option having the 
same expiration date and strike price.
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SPIKES Combinations
    The Exchange is proposing to adopt new transaction fees for SPIKES 
Combinations. A SPIKES Combination is a specific type of complex order, 
which will have separate pricing from all other SPIKES complex orders. 
The Exchange is proposing to insert the definition of a SPIKES 
Combination beneath the SPIKES Simple and Complex Fees table on its Fee 
Schedule. Generally, a SPIKES Combination is a type of complex strategy 
that is designed to replicate the exposure provided by a futures 
contract. Accordingly, the Exchange is proposing to have separate 
transaction fees for SPIKES Combinations, which will be significantly 
lower than the transaction fees for all other types of SPIKES complex 
orders, with the exception of complex orders for Priority Customers \5\ 
(which are assessed at the same rate--$0.00 per contract). For all 
Origins other than Priority Customer, the Exchange is proposing a 
transaction fee of $0.01 per contract, per leg for SPIKES Combinations. 
Additionally, the Exchange is proposing to add a note beneath the 
SPIKES Simple and Complex Fees table clarifying that, if a complex 
strategy contains both a Combination component as well as a non-
Combination component, the portion (i.e., legs) of the complex strategy 
that comprises the SPIKES Combination will be charged at the 
Combination rate, and the portion of the complex strategy that 
comprises the non-Combination component will be charged at the 
applicable complex rates.
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    \5\ The term ``Priority Customer: Means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100.
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Complex Fees
    The Exchange is proposing to change the complex fees so that 
complex orders (other than SPIKES Combinations) are charged the same 
fees as simple orders or quotes of the same Origin (and combined in the 
same fee table), using the simple maker and taker fee structure already 
in place. Currently, the Exchange charges a single fee for complex 
orders based on Origin, regardless of whether such order was a maker or 
a taker. As proposed, the Exchange will now charge complex orders, 
depending on whether such order is a maker or a taker, and based on the 
Origin. Except for Priority Customer Origin (which will be assessed a 
charge of $0.00 per contract, whether maker or taker), all Origins will 
be charged the same maker or taker rate for complex orders as the 
Origin is currently charged for simple orders or quotes. For MIAX 
Market Maker and Firm Proprietary Origins, the maker rate is $0.00 and 
the taker rate is $0.20 per contract. Additionally, for MIAX Market 
Maker and Firm Proprietary Origins, taker fees for options with a 
premium price of $0.10 or less will be charged $0.05 per contract for 
Complex orders. For non-MIAX Market Maker, Broker-Dealer, and Public 
Customer that is not a Priority Customer Origins, the maker rate is 
$0.10 and the taker rate is $0.25 per contract. The Exchange also 
proposes to clarify the rates that apply to all Origins in a Complex 
Auction.\6\ In a Complex Auction, Priority Customer Origin will be 
charged the complex maker rate. Origins that are not a Priority 
Customer will be charged the applicable complex taker rate. The 
Exchange proposes to add a note beneath the Simple and Complex Fees 
table clarifying such fee applicability for quotes/orders executed in a 
Complex Auction.
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    \6\ A ``Complex Auction'' is an auction of a complex order as 
set forth in Exchange Rule 518(d). See Exchange Rule 518(a)(3).
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Simple and Complex Large Trade Discount Thresholds
    The Exchange currently has in place a Simple/Complex Large Trade 
Discount. Pursuant to such discount program, for any single order/
quote, no fee applies to the number of contracts executed above the 
threshold amount. The threshold amount is currently set at 175,000 
contracts, and applies to both simple and complex orders of all Origins 
(except for Priority Customer Origin, which has a threshold amount of 
0, because Priority Customer orders are assessed a fee of $0.00 for 
simple and complex volume). The Exchange now proposes to create a 
separate Large Trade Discount Threshold for both simple and complex 
orders, and to lower the threshold amounts for each. As proposed, a 
simple order that reaches the proposed size threshold of 10,000 
contracts, tied to a single order, will have the relevant fees apply to 
the contracts at and below the size threshold for simple volume; no 
fees shall apply to the number of contracts executed above the 
threshold, with certain exceptions. As proposed, a

[[Page 17209]]

complex order that reaches the proposed size threshold of 25,000 
contracts, tied to a single order, will have the relevant fees apply to 
the contracts at and below the size threshold for complex volume; no 
fees shall apply to the number of contracts executed above the 
threshold, with certain exceptions. In the case of each discount 
program, the exceptions are the same and are not proposed to be 
changed: The Large Trade Discount does not apply to volume from 
Priority Customer orders, Maker orders, SPIKES Opening orders, and the 
Surcharge.
    Accordingly, for any simple order/quote, no fee shall apply to the 
number of contracts executed above the first 10,000 contracts for 
simple orders and the first 25,000 contracts for complex orders for 
Market Makers, Non-MIAX Market Makers, Broker-Dealers, Firm Proprietary 
orders, and Public Customers that are not Priority Customers. The 
Exchange is not proposing to change that such discount program does not 
apply to Priority Customer orders because, as discussed, the Exchange 
is currently charging Priority Customers a $0.00 fee for these volume 
segments.
    As proposed, the SPIKES Simple and Complex Fees table will be as 
follows:

                                                                Simple and Complex Fees #
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Simple/       Simple/
                                      complex       complex       Simple      Combination    Simple large trade discount    Complex large trade discount
              Origin                [yen] maker   [yen] taker   opening ($)     ~! ($)               threshold +                    threshold +
                                        ($)           ($)
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Priority Customer................         $0.00         $0.00         $0.00         $0.00  0.............................  0
Market Maker.....................          0.00        * 0.20          0.15          0.01  First 10,000 contracts........  First 25,000 contracts.
Non-MIAX Market Maker............          0.10          0.25          0.15          0.01  First 10,000 contracts........  First 25,000 contracts.
Broker-Dealer....................          0.10          0.25          0.15          0.01  First 10,000 contracts........  First 25,000 contracts.
Firm Proprietary.................          0.00        * 0.20          0.15          0.01  First 10,000 contracts........  First 25,000 contracts.
Public Customer that is Not a              0.10          0.25          0.15          0.01  First 10,000 contracts........  First 25,000 contracts.
 Priority Customer.
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* Taker fees for options with a premium price of $0.10 or less will be charged $0.05 per contract.
\ A ``SPIKES Combination'' is a purchase (sale) of a SPIKES call option and sale (purchase) of a SPIKES put option having the same expiration date and
  strike price.
\!\ The SPIKES Combination portion of a SPIKES Combination Order will be charged at the Combination rate and other legs will be charged at the Complex
  rate. All fees are per contract per leg.
+ Tied to Single Order/Quote ID. For any single order/quote, no fee shall apply to the number of contracts executed above the Simple or Complex Large
  Trade Discount Threshold. This discount does not apply to Priority Customer orders, Maker orders, SPIKES Opening orders, and the Surcharge.
[yen] For quotes/orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Maker rate. Origins that are not a Priority
  Customer will be charged the applicable Complex Taker rate.

PRIME and cPRIME Large Trade Discounts
    The Exchange further proposes to establish a Large Trade Discount 
program for both PRIME \7\ and cPRIME \8\ orders in SPIKES. These 
discount programs will operate in the same manner as the discount 
programs for simple and complex orders, and will have the same 
threshold amounts, with one exception described below relating to 
Priority Customer Origin. Specifically, the Exchange proposes to 
establish a Large Trade Discount Threshold for PRIME orders in the 
amount of 10,000 contracts. A PRIME order that reaches the proposed 
size threshold of 10,000 contracts, tied to a single order, will have 
the relevant fees apply to the contracts at and below the size 
threshold for PRIME volume; no fees shall apply to the number of 
contracts executed above the threshold, with certain exceptions 
described below. Since a PRIME order is a paired order, the transaction 
fee will be capped at 10,000 contracts from a single order, for the 
Agency Side and Contra Side, independently. Contracts greater than the 
threshold will not be charged the transaction fee but will continue to 
be charged the Surcharge. Responder fees and Break-up Credits will not 
be capped. The Exchange notes that, unlike the Simple and Complex Large 
Trade Discount programs, there is a non-zero threshold amount for 
Priority Customer Origin, which is the same amount as all other 
Origins. The purpose for having a cap for Priority Customer Origin in 
the PRIME Large Trade Discount program is because Priority Customer 
Origin is currently assessed a fee of $0.20 per contract if it is a 
Contra in the execution. Therefore, the Exchange believes it is 
appropriate to apply the cap to Priority Customer Origin in this 
circumstance.
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    \7\ PRIME is a process by which a Member may electronically 
submit for execution (``Auction'') an order it represents as agent 
(``Agency Order'') against principal interest, and/or an Agency 
Order against solicited interest. See Exchange Rule 515A(a).
    \8\ cPRIME is the process by which a Member may electronically 
submit a ``cPRIME Order'' (as defined in Exchange Rule 518(b)(7)) it 
represents as agent (a ``cPRIME Agency Order'') against principal or 
solicited interest for execution (a ``cPRIME Auction''). See 
Interpretation and Policy .12 of Exchange Rule 515A.
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    Similarly, the Exchange proposes to establish a Large Trade 
Threshold for cPRIME orders in the amount of 25,000 contracts. A cPRIME 
order that reaches the proposed size threshold of 25,000 contracts, 
tied to a single order, will have the relevant fees apply to the 
contracts at and below the size threshold for cPRIME volume; no fees 
shall apply to the number of contracts executed above the threshold, 
with certain exceptions described below. Since a cPRIME order is a 
paired order, the transaction fee will be capped at 25,000 contracts 
that are traded per strategy from a single order, for the Agency Side 
and for the Contra Side independently. Contracts greater than the 
threshold will not be charged the transaction fee but will continue to 
be charged the Surcharge. Responder fees and Break-up Credits will not 
be capped. The Exchange notes that, unlike the Simple and Complex Large 
Trade Discount programs, there is a non-zero threshold amount for 
Priority Customer Origin, which is the same amount as all other 
Origins. The purpose for having a cap for Priority Customer Origin in 
the cPRIME Large Trade Discount program is because Priority Customer 
Origin is currently assessed a fee of $0.20 per contract if it is a 
Contra in the execution. Therefore, the Exchange believes it is 
appropriate to apply the cap to Priority Customer Origin in this 
circumstance.
    As proposed, the SPIKES PRIME and cPRIME Fees table will be as 
follows:

[[Page 17210]]

                                                                 PRIME and cPRIME Fees 
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                                                                                                           PRIME large trade        cPRIME large trade
                Origin                 Initiating ($)    Contra ($)     Responder ($)   Break-up ($)      discount threshold        discount threshold
                                                                                                                [caret]                   [diam]
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Priority Customer....................           $0.00           $0.20           $0.25         ($0.15)  First 10,000 contracts..  First 25,000 contracts
Market Maker.........................            0.10            0.20            0.25          (0.15)  First 10,000 contracts..  First 25,000 contracts
Non-MIAX Market Maker................            0.10            0.20            0.25          (0.15)  First 10,000 contracts..  First 25,000 contracts
Broker-Dealer........................            0.10            0.20            0.25          (0.15)  First 10,000 contracts..  First 25,000 contracts
Firm Proprietary.....................            0.10            0.20            0.25          (0.15)  First 10,000 contracts..  First 25,000 contracts
Public Customer that is Not a                    0.10            0.20            0.25          (0.15)  First 10,000 contracts..  First 25,000 contracts
 Priority Customer.
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 An Index License Surcharge (``Surcharge'') of $0.075 will apply to any contract that is executed by an Origin except Priority Customer. The Surcharge
  applies per contract side per leg. The Surcharge will be waived for the ``Waiver Period'' which, for purposes of this Section 1)a)xi) of the Fee
  Schedule, means the period of time from the launch of trading of SPIKES options until such time that the Exchange submits a filing to terminate the
  Waiver Period. The Exchange will issue a Regulatory Circular announcing the end of the Waiver Period at least fifteen (15) days prior to the
  termination of the Waiver Period and effective date of such Surcharge.
[caret] The transaction fee for SPIKES PRIME will be capped at 10,000 contracts from a single order, for the Agency Side and Contra Side independently.
  Contracts greater than the threshold will not be charged the transaction fee but will continue to be charged the Surcharge. Responder fees and Break-
  up Credits will not be capped.
[diam] The transaction fee for SPIKES cPRIME will be capped at 25,000 contracts that are traded per strategy from a single order, for the Agency Side
  and for the Contra Side independently. Contracts greater than the threshold will not be charged the transaction fee but will continue to be charged
  the Surcharge. Responder fees and Break-up Credits will not be capped.

    SPIKES Settlement Day SPY Opening Auction Fees

             SPIKES Settlement Day SPY Opening Auction Fees
------------------------------------------------------------------------
                                                            SPY opening
                         Origin                           quotes/ orders
                                                             [curren]
------------------------------------------------------------------------
Priority Customer.......................................           $0.00
Market Maker............................................            0.03
Non-MIAX Market Maker...................................            0.06
Broker-Dealer...........................................            0.06
Firm Proprietary........................................            0.03
Public Customer that is Not a Priority Customer.........            0.06
------------------------------------------------------------------------
[curren] These fees will be charged to each side of all trades occurring
  in the SPY opening in the expiration month used to determine SPIKES
  settlement on settlement day only; in lieu of any other fees in the
  Fee Schedule.

    The Exchange proposes to make a minor non-substantive technical 
correction to the SPIKES Settlement Day SPY Opening Auction Fees table. 
The Exchange proposes to amend the column heading for SPY Opening 
Orders to include Quotes to clarify that the fees listed apply to both 
SPY Opening Quotes and Orders. These fees are only applicable on SPIKES 
settlement day. The purpose for lower, separate fees for these SPY 
transactions is to encourage Market Makers and other market 
participants that need to unwind a SPIKES hedge to participate in the 
Opening Auction, by making the pricing more attractive.
    The Exchange believes that each of the proposed SPIKES transaction 
fee changes described herein are reasonable in that they are designed 
to encourage market participants to provide liquidity for SPIKES index 
options on the Exchange.
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 provides for the equitable allocation of reasonable dues, fees 
and other charges among Exchange Members \11\ and issuers and other 
persons using its facilities. The Exchange also believes the proposal 
furthers the objectives of Section 6(b)(5) of the Act \12\ in that it 
is designed to promote just and equitable principles of trade, to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general to protect 
investors and the public interest and is not designed to permit unfair 
discrimination between customer, issuers, brokers and dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \12\ 15 U.S.C. 78f(b)(5).
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SPIKES Combinations and Complex Fees
    The Exchange believes that the proposed fee changes for 
transactions in SPIKES Combinations and complex orders is consistent 
with Section 6(b)(4) of the Act in that they are reasonable, equitable, 
and not unfairly discriminatory. The proposed fee changes are 
reasonably designed because they are intended to incentivize market 
participants to transact in SPIKES index options on the Exchange, which 
enables the Exchange to improve its overall competitiveness and 
strengthen its market quality for all market participants in SPIKES 
index options.
    The Exchange believes that it is reasonable to establish separate 
pricing for SPIKES Combinations, in order to encourage trading in 
SPIKES Combinations on the Exchange. Generally, a SPIKES Combination is 
a type of complex strategy that is designed to replicate the exposure 
provided by a futures contract. Accordingly, the Exchange believes it 
is appropriate to have separate transaction fees for SPIKES 
Combinations, which will be significantly lower than the transaction 
fees for all other types of complex orders, with the exception of 
complex orders for Priority Customers (which are assessed at the same 
rate--$0.00 per contract). A SPIKES Combination will be charged lower 
fees than a standard SPIKES complex order. The Exchange also believes 
combining complex maker and taker fees with the respective simple maker 
and taker fees simplifies the Exchange's fee structure, which benefits 
investors as it clarifies the Exchange's fees and reduces the risk of 
confusion.

[[Page 17211]]

    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to apportion Complex Auction fees among 
participants by Origin. Priority Customer Complex orders will be 
assessed the Complex Maker rate of $0.00 per contract, and Origins that 
are not a Priority Customer will be charged the applicable Complex 
Taker rate. During a Complex Auction there is no Maker/Taker 
distinction, therefore the Exchange will assign a role, and applicable 
fee, based upon Origin. The Exchange notes that other exchanges employ 
this methodology in similar circumstances.\13\ The Exchange believes 
this a fair and equitable way to apportion fees among participants in a 
Complex Auction.
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    \13\ See Nasdaq GEMX Options 7, Section 3, Footnote 4.
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    The proposed SPIKES Combination fees and complex fees are 
reasonable, equitable, and not unfairly discriminatory because they 
will apply similarly to Priority Customer orders, Market Maker orders, 
Non-MIAX Market Maker orders, Broker Dealer orders, Firm Proprietary 
orders, and Public Customers that are not Priority Customers orders, in 
each respective category of SPIKES index option orders. All similarly 
situated categories of participants are subject to the same transaction 
fee and rebate schedule, and access to the Exchange is offered on terms 
that are not unfairly discriminatory.
    The exchanges in general have historically aimed to improve markets 
for investors and develop various features within market structure for 
customer benefit. The Exchange assesses Priority Customers lower or no 
transaction fees because Priority Customer order flow enhances 
liquidity on the Exchange for the benefit of all market participants. 
Priority Customer liquidity benefits all market participants by 
providing more trading opportunities, which attracts Market Makers. An 
increase in the activity of these market participants in turn 
facilitates tighter spreads, which may cause an additional 
corresponding increase in order flow from other market participants.
    Moreover, the Exchange believes that assessing all other market 
participants that are not Priority Customers a higher transaction fee 
than Priority Customers for SPIKES Combinations and complex orders is 
reasonable, equitable, and not unfairly discriminatory because these 
types of market participants are more sophisticated and have higher 
levels of order flow activity and system usage. This level of trading 
activity draws on a greater amount of system resources than that of 
Priority Customers. Further, the Exchange believes it is equitable and 
not unfairly discriminatory to assess all other market participants 
that are not Priority Customers, Market Makers, or Firm Proprietary 
orders a higher complex maker and taker fees for orders in SPIKES 
options because Priority Customers, Market Makers, and Firm Proprietary 
orders bring valuable liquidity to the market, which in turn benefits 
other market participants. Priority Customer and Firm Proprietary order 
flow enhances liquidity on the Exchange for the benefit of all market 
participants. Specifically, Priority Customer and Firm Proprietary 
order flow liquidity benefits all market participants (as Priority 
Customer and Firm Proprietary orders are generally providers of 
liquidity) by providing more robust trading opportunities, which 
attracts Market Makers. An increase in the activity of these market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants, which in turn benefits the market as a whole.
Simple and Complex Large Trade Discount Thresholds
    The Exchange believes reducing the Large Trade Discount Threshold 
for simple orders or quotes from 175,000 to 10,000 is reasonable, 
equitable, and not unfairly discriminatory because it provides an 
incentive for Members to submit large sized simple orders or quotes to 
the Exchange, which will benefit all market participants. All similarly 
situated categories of participants are subject to the same threshold 
(except for Priority Customers which are not charged a transaction fee 
otherwise, so no discount is necessary), and access to the Exchange is 
offered on terms that are not unfairly discriminatory. Additionally, 
the Exchange believes that creating a separate Large Trade Discount for 
complex orders at 25,000 contracts is reasonable, equitable, and not 
unfairly discriminatory because it provides an incentive for Members to 
submit large sized complex orders to the Exchange, which will benefit 
all market participants. All similarly situated categories of 
participants are subject to the same threshold (except for Priority 
Customers which are not charged a transaction fee otherwise, so no 
discount is necessary), and access to the Exchange is offered on terms 
that are not unfairly discriminatory.
PRIME and cPRIME Large Trade Discounts
    The Exchange believes that offering Members a Large Trade Discount 
for PRIME orders and cPRIME orders with identical thresholds as those 
proposed for simple and complex orders, respectively, is reasonable, 
equitable, and not unfairly discriminatory because it provides an 
incentive for Members to submit large sized PRIME and cPRIME liquidity 
to the Exchange, which will benefit all market participants. All 
similarly situated categories of participants are subject to the same 
discount, and access to the Exchange is offered on terms that are not 
unfairly discriminatory.
    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to not cap Responder fees as there is no cap on 
corresponding Break-up Credits. The Exchange believes it is necessary 
to provide Break-up Credits in order to incentivize Members to submit 
PRIME and cPRIME orders to the Exchange, which provides important price 
improvement opportunities for Agency orders. The Exchange notes that 
other exchanges exclude response fees from fee caps as well, including 
Nasdaq ISE, which excludes Crossing Orders from the firm fee cap.\14\
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    \14\ See Nasdaq ISE, Options 7, Section 6(H).
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SPIKES Settlement Day SPY Opening Auction Fees
    The non-substantive technical change proposed to the column heading 
for SPY Opening Orders to include Quotes promotes just and equitable 
principles of trade, removes impediments to and perfects the mechanism 
of a free and open market and a national market system, and, in general 
protects investors and the public interest by providing additional 
detail and clarity regarding fees charged by the Exchange. It is in the 
best interest of investors and the public for fees to be as clear and 
concise as possible so that investors and the public may make informed 
decisions regarding their orders.
    The purpose for adopting lower, separate fees for these SPY 
transactions is to encourage Market Makers and other market 
participants that need to unwind a SPIKES hedge to participate in the 
Opening Auction, by making the pricing more attractive. Specifically, 
market participants holding short, hedged SPIKES options could 
liquidate that hedge by selling their SPY options series, while traders 
holding long, hedged SPIKES options could liquidate their hedge by 
buying SPY option series.

[[Page 17212]]

These market participants may liquidate their hedges by submitting 
SPIKES strategy orders in the appropriate SPY option series during the 
SPIKES Special Settlement Auction\15\ on the SPIKES expiration/final 
settlement date.
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    \15\ See Exchange Rule 503, Interpretations and Policies .03.
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    The Exchange believes that the fee and rebate structure for 
transactions involving SPY Opening orders for options that are used in 
the calculation of the SPIKES Index on final settlement day is 
reasonable, equitable, and not unfairly discriminatory because it will 
apply similarly to Priority Customer orders, Market Maker orders, Non-
MIAX Market Maker orders, Broker Dealer orders, Firm Proprietary 
orders, and Public Customers that are not Priority Customers orders, in 
each respective category of such orders.
    The Exchange currently applies fees to orders that participate in 
the SPIKES Settlement Day SPY Opening Auction.\16\ The Exchange 
believes it would not be unfairly discriminatory to apply an identical 
fee structure to quotes that participate in the SPIKES Settlement Day 
SPY Opening Auction. The Exchange believes that the fee and rebate 
structure for transactions involving SPY Opening Quotes for options 
that are used in the calculation of the SPIKES Index on final 
settlement day is reasonable, equitable, and not unfairly 
discriminatory because it will apply similarly to all Market Makers. 
All similarly situated categories of participants are subject to the 
same transaction fee and rebate schedule, and access to the Exchange is 
offered on terms that are not unfairly discriminatory.
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    \16\ See Securities Exchange Release No. 85283 (March 11, 2019), 
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11) (Proposal to amend the 
MIAX Options Fee Schedule to adopt transaction fees and rebates for 
SPIKES index option orders and quotes).
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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 competitiveness of the Exchange 
relative to other exchanges that offer their own singly-listed 
products. The Exchange believes that the proposed fees and rebates for 
transactions in SPIKES index options are not going to have an impact on 
intra-market competition based on the total cost for participants to 
transact in such order types versus the cost for participants to 
transact in other order types available for trading on the Exchange.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues and 
competing products 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 is 
adjusting its fees in a manner that encourages market participants to 
provide liquidity in SPIKES index options, 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,\17\ and Rule 19b-4(f)(2) \18\ thereunder. 
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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    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 17 CFR 240.19b-(f)(2).
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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 [email protected]. Please include 
File Number SR-MIAX-2019-20 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-2019-20. 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 (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 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 10:00 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-MIAX-2019-20 and should be submitted on 
or before May 15, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-08211 Filed 4-23-19; 8:45 am]
 BILLING CODE 8011-01-P