[Federal Register Volume 78, Number 70 (Thursday, April 11, 2013)]
[Notices]
[Pages 21661-21663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-08487]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69320; File No. SR-MIAX-2013-13]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Establish an Administrative Information 
Subscriber (AIS) and AIS Port Fees

April 5, 2013.
    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 March 25, 2013, 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 the MIAX Options Fee 
Schedule (the ``Fee Schedule'') to add a new category of MIAX 
participant, an Administrative Information Subscriber, as defined 
below, and to establish testing and AIS Port Fees for such new 
participants who wish to receive administrative information (described 
more fully below) via connectivity with the MIAX System. The Exchange 
also proposes technical amendments to the Fee Schedule as described 
below.
    While changes to the Fee Schedule pursuant to this proposal are 
effective upon filing, the Exchange has designated these changes to be 
operative on April 1, 2013.
    The text of the proposed rule change is provided in Exhibit 5. The 
text of the proposed rule change is also 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 purpose of the proposed rule change is to amend the MIAX 
Options Fee Schedule (the ``Fee Schedule'') to add a new category of 
MIAX participant, an Administrative Information Subscriber (``AIS''), 
as defined below, and to establish testing and AIS Port Fees for such 
new participants who wish to receive administrative information 
(described more fully below) via connectivity with the MIAX System.
    Concurrently with the instant proposal, the Exchange filed a 
proposed rule change to establish fees for distributors of the MIAX Top 
of Market data product (``ToM'').\3\ ToM provides distributors with a 
direct data feed that includes the Exchange's best bid and offer, with 
aggregate size, and last sale information, based on displayable order 
and quoting interest on the Exchange.
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    \3\ See SR-MIAX-2013-14.
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    In addition to MIAX's best bid and offer, with aggregate size and 
last sale information, distributors that subscribe to ToM also receive: 
opening imbalance condition information; opening routing information; 
Expanded Quote Range \4\ information, as provided in MIAX Rule 
503(f)(5); Post-Halt Notification,\5\ as provided in MIAX Rule 504(d); 
and Liquidity Refresh \6\ condition

[[Page 21662]]

information, as provided in MIAX Rule 515(c)(1)(iii)(A). This 
additional information (the ``administrative information'') is included 
in the ToM feed and is not top of market information. The 
administrative information is also currently available to MIAX Market 
Makers via connectivity with the MIAX Express Interface (``MEI''),\7\ 
for which they are assessed connectivity fees.
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    \4\ Where there is an imbalance at the price at which the 
maximum number of contracts can trade that is also at or within the 
highest valid width quote bid and lowest valid width quote offer, 
the System will calculate an Expanded Quote Range (``EQR''). The EQR 
will be recalculated any time a Route Timer or Imbalance Timer 
expires if material conditions of the market (imbalance size, ABBO 
price or size, liquidity price or size, etc.) have changed during 
the timer. Once calculated, the EQR will represent the limits of the 
range in which transactions may occur during the opening process. 
See Exchange Rule 503(f)(5).
    \5\ After the Exchange has determined to end a trading system 
halt, the System will broadcast to subscribers of the Exchange's 
data feeds, a Post-Halt Notification. See Exchange Rule 504(d).
    \6\ If a Market Maker quote was all or part of the MIAX Best Bid 
or Offer (``MBBO'') and the Market Maker's quote was exhausted by 
the partial execution of the initiating order, the System will pause 
the market for a time period not to exceed one second to allow 
additional orders or quotes refreshing the liquidity at the MBBO to 
be received (``liquidity refresh pause''). See Exchange Rule 
515(c)(1)(iii)(A).
    \7\ An MEI Port provides a Market Maker with the connectivity 
necessary to submit electronic quotes to the MIAX System.
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    In order to accommodate those who wish to receive the 
administrative information but who do not wish to subscribe to the ToM 
product or register as a MIAX Market Maker, the Exchange will make the 
administrative information available to any participant via 
connectivity with an AIS Port, as described below.
AIS
    An AIS is a market participant that connects with the MIAX System 
for purposes of receiving the administrative information described 
above. Thus, an AIS that elects not to receive the top of market data 
through a subscription to ToM or act as a MIAX Market Maker will be 
able receive [sic] the administrative information via connectivity to 
the MIAX System through an AIS Port.\8\
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    \8\ An AIS Port provides an AIS with the connectivity necessary 
to receive the administrative information from the MIAX System.
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API Testing and Certification Fee
    An AIS, whether a MIAX Member or non-Member, will be assessed a 
one-time Application Programming Interface (``API'') Testing and 
Certification fee of $1,000.00. An API makes it possible for Member or 
non-Member software to communicate with Exchange software applications, 
and is subject to Member testing with, and certification by, the 
Exchange. The fee represents costs incurred by the Exchange as it works 
with each Member while testing and certifying that the Member's 
software systems communicate properly with MIAX.
    The Exchange proposes a lower API Testing and Certification Fee for 
an AIS than that which is already in place for other participants such 
as Third Party Vendors and Market Makers who are subscribers of MIAX's 
market and other data feeds. The higher fee charged to such 
participants reflects the greater amount of time spent by MIAX 
employees testing and certifying them due to the additional testing 
complexity of those feeds or configurations. Also, because third party 
vendors are redistributing data and reselling services to other market 
participants, the number and types of scenarios that need to be tested 
are more numerous and complex than those tested and certified for an 
AIS. Therefore, the Exchange believes that the proposed $1,000 API 
Testing and Certification Fee for an AIS is reasonable and not unfairly 
discriminatory.
Monthly System Connectivity Fees
    MIAX will assess a monthly Network Connectivity Fee of $1,000.00 
for a one Gigabit connection, and $5,000.00 for a ten Gigabit 
connection to an AIS, whether such AIS is a MIAX Member or non-Member. 
Respecting Members, the Exchange charges the same monthly Network 
Connectivity Fee to all individual firms, which would include an AIS. 
Respecting non-Members, the Exchange charges Service Bureaus \9\ and 
Extranet Providers a higher fee of $2,000.00 for a one Gigabit 
connection, and $10,000.00 for a ten Gigabit connection.
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    \9\ A Service Bureau is a technology provider that offers and 
supplies technology and technology services to a trading firm that 
does not have its own proprietary system.
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    MIAX proposes to assess a lower fee to an AIS than to non-Member 
Service Bureaus and Extranet Providers to reflect the fact that Service 
Bureaus and Extranet Providers serve as conduits to MIAX Members that 
do not have their own proprietary systems or do not directly connect to 
MIAX. The Service Bureaus and Extranet Providers recover the cost of 
the MIAX Network Connectivity fee from their customers, resulting in a 
lower overall fee to an AIS.
    The Member Network Connectivity fee will be pro-rated for a new AIS 
Member or non-Member connecting to the MIAX System based on the number 
of trading days on which the AIS received administrative information by 
way of connectivity with MIAX, divided by the total number of trading 
days in such month, multiplied by the monthly rate.
Port Fees
    The Exchange will assess monthly AIS Port Fees for the use of AIS 
Ports, which provide an AIS with the connectivity necessary to receive 
the administrative information from the MIAX System.
    The Exchange will assess monthly AIS Port fees based upon the 
number of Exchange matching engines \10\ to which an AIS connects. An 
AIS will be allocated two AIS ports for each matching engine they use. 
For example, an AIS that wishes to receive administrative information 
in just one symbol would require the two AIS ports in a single matching 
engine; an AIS wishing to receive the administrative information in all 
symbols traded on the Exchange would require the two AIS Ports in each 
of the Exchange's matching engines.
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    \10\ A ``matching engine'' is a part of the MIAX electronic 
system that processes options quotes and trades on a symbol-by-
symbol basis. Some matching engines process option classes with 
multiple root symbols, and other matching engines are dedicated to 
one single option root symbol (for example, options on SPY are 
processed by one single matching engine that is dedicated only to 
SPY options). A particular root symbol may only be assigned to a 
single designated matching engine. A particular root symbol may not 
be assigned to multiple matching engines.
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    The Exchange will assess a monthly AIS Port fee of $1,000.00 to an 
AIS for the first matching engine on which an AIS has the two ports, 
$250.00 each for the second through fifth matching engines on which the 
AIS has the two ports, and $125.00 each for the sixth matching engine 
and any additional matching engines on which the AIS has the two ports.
    The Exchange proposes to assess lower AIS Port Fees than it 
assesses for Market Maker MEI Port Fees because Market Makers will use 
the MEI connectivity to submit quotes, whereas an AIS will not. The 
higher charge for MEI Port Fees reflects the greater amount of Exchange 
infrastructure that will be used by Market Makers in submitting quotes 
as compared to the infrastructure needed by an AIS (who will not submit 
quotes), and the greater amount of time spent by MIAX employees engaged 
in support, maintenance, quality control and other services on behalf 
of Market Makers.
Technical Amendments to the Fee Schedule
    The Exchange also proposes a technical amendment to the Fee 
Schedule by deleting obsolete provisions stating that monthly FIX, MEI, 
fees and MIAX Member Participant Identifier (``MPID'') fees will be in 
effect beginning January 1, 2013, and stating that Clearing Trade Drop 
Port Fees will be Effective February 1, 2013. The Exchange also 
proposes to delete language from the Fee Schedule that states that MEI 
Port fees will be capped at $1,000 per month per Market Maker until the 
first full calendar month during which the Exchange lists and trades 
options overlying at least 100

[[Page 21663]]

underlying securities. The January 1, 2013 and February 1, 2013 
effective dates are no longer relevant, and the Exchange currently 
lists and trades options overlying more than 100 underlying securities, 
thus obviating the need for this provision.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) and 6(b)(5) of the Act \12\ 
in particular, in that it is an equitable allocation of reasonable fees 
and other charges.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    An AIS may access the same administrative information as any other 
participant that connects with the MIAX System. Currently, MIAX 
assesses monthly MEI Port Fees on Market Makers as set forth in the Fee 
Schedule. An MEI Port provides a Marker Maker with necessary 
connectivity to submit quotes. The Exchange believes that the proposed 
testing, connectivity and AIS Port fees to AIS' is reasonable and not 
unfairly discriminatory because an AIS will still require connectivity 
in order to receive the administrative information, necessitating 
Exchange expense for servers, configuration, testing, power, 
maintenance, and quality control, among other things, that is incurred 
for anyone connecting to the MIAX System.
    The Exchange further believes that the proposed lower monthly AIS 
Port Fees are equitable and not unfairly discriminatory because of the 
reduced Exchange expense for servers, configuration, testing, power, 
maintenance, and quality control that is required for an AIS connecting 
to an AIS Port vis-[agrave]-vis Market Makers connecting with the MIAX 
System through the MEI Port.

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. On the contrary, because an AIS 
will only receive administrative information via the AIS Port, and will 
not submit competing quotes with MIAX Market Makers or other market 
participants, the Exchange believes that the proposed rule change will 
have no effect on competition in the 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.\13\ 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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    \13\ 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 [email protected]. Please include 
File Number SR-MIAX-2013-13 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2013-13. 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-2013-13 and should be 
submitted on or before May 2, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08487 Filed 4-10-13; 8:45 am]
BILLING CODE 8011-01-P