[Federal Register Volume 78, Number 157 (Wednesday, August 14, 2013)]
[Notices]
[Pages 49586-49588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-19665]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70137; File No. SR-MIAX-2013-39]


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

August 8, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 1, 2013, Miami International Securities Exchange LLC 
(``Exchange'' or ``MIAX'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the self-
regulatory organization. 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 reflect the addition of a new 
category of connectivity to the MIAX System by way of MIAX Express 
Interface (``MEI'') Ports (defined below).
    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 MIAX Options Fee Schedule (the 
``Fee Schedule'') to add a new category of MIAX Express Interface 
(``MEI'') Port,\3\ known as a Limited Service MEI Port, to the System 
Connectivity Fees section of the Fee Schedule. The new Limited Service 
MEI Port enhances the existing MEI Port connectivity made available to 
Market Makers. The Exchange is proposing no additional charge for the 
additional category of connectivity.
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    \3\ MEI is a connection to MIAX systems that enables Market 
Makers to submit electronic quotes to MIAX.
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    Currently, MIAX assesses monthly MEI Port Fees on Market Makers 
based upon the number of MIAX matching engines \4\ used by the Market 
Maker. MEI Port users are allocated two Full Service MEI Ports \5\ per 
matching engine to which they connect. The Exchange currently assesses 
a fee of $1,000 per month on Market Makers for the first matching 
engine they use; $500 per month for each of matching engines 2 through 
5; and $250 per month for each of matching engines 6 and above. For 
example, a Market Maker that wishes to make markets in just one symbol 
would require the two MEI Ports in a single matching engine; a Market 
Maker wishing to make markets in all symbols traded on MIAX would 
require the two MEI Ports in each of the Exchange's matching engines. 
The MEI Port includes access to MIAX's primary and secondary data 
centers and its disaster recovery center.
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    \4\ 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 will process option classes with 
multiple root symbols, and other matching engines will be dedicated 
to one single option root symbol (for example, options on SPY will 
be processed by one single matching engine that is dedicated only to 
SPY). 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.
    \5\ In order to distinguish the Limited Service MEI Port from 
the existing MEI Port, the existing MEI Port will be referred to as 
a Full Service MEI Port.
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    The Exchange proposes to allocate to each Market Maker two Limited 
Service MEI Ports per matching engine in addition to the current two 
Full Service MEI Ports. In order to distinguish the Limited Service MEI 
Port from the existing MEI Port, the existing MEI Port will be referred 
to as a Full Service MEI Port.
Full Service MEI Port
    The current MEI Port, now known as a Full Service MEI Port, 
provides Market Makers with the ability to send Market Maker Standard 
quotes, eQuotes,\6\ and quote purge messages to the MIAX System. Full 
Service MEI Ports are also capable of receiving administrative 
information. Market Makers are limited to two Full Service MEI Ports 
per matching engine.
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    \6\ An eQuote is a quote with a specific time in force that does 
not automatically cancel and replace a previous Standard quote or 
eQuote. An eQuote can be cancelled by the Market Maker at any time, 
or can be replaced by another eQuote that contains specific 
instructions to cancel an existing eQuote. See Exchange Rule 
517(a)(2).
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Limited Service MEI Port
    The new Limited Service MEI Ports provide Market Makers with the 
ability to send eQuotes and quote purge messages only, but not Market 
Maker Standard quotes, to the MIAX System. Limited Service MEI Ports 
are also capable of receiving administrative information. Market Makers 
are limited to two Limited Service MEI Ports per matching engine.
    Under the proposal, Market Makers that establish connectivity 
through MEI Ports will be allocated two Full Service

[[Page 49587]]

MEI Ports and two Limited Service MEI Ports per matching engine at no 
additional cost. The Fee Schedule is being amended to reflect that the 
monthly fees paid for MEI Ports will result in the allocation of four 
MEI Ports to Market Makers. Accordingly, Market Makers will continue to 
be assessed $1,000 per month for the first matching engine they use; 
$500 per month for matching engines 2 through 5; and $250 per month for 
matching engines 6 and above, and they now will be allocated two 
additional Limited Service MEI Ports at the same monthly price for 
which they currently pay for two MEI Ports; they will receive four MEI 
Ports at the same monthly price they currently pay for two.
    The purpose of this amendment to the Fee Schedule, offering of 
added value to the Exchange's MEI connectivity, is to provide Market 
Makers with the technical flexibility to connect the Limited Service 
Ports to independent servers that host their eQuote and purge 
functionality. The Exchange believes that the additional ports will 
help Market Makers mitigate the risk of using the same server for all 
of their Market Maker quoting activity. Currently, Market Makers in the 
MIAX System must use the MEI Ports (to be referred to now as the Full 
Service MEI Ports) to submit quotations, to purge quotations, and to 
submit eQuotes. By using the Limited Service MEI Ports for risk 
purposes, Market Makers can place purge functionality on a different 
server than the Market Maker quoting server (via the Limited Service 
MEI Ports), which provides them a failsafe for getting out of the 
market in case they have an issue with the quote server. Additionally, 
Market Makers may opt to use the Limited Service MEI Ports to submit 
eQuotes. Because eQuotes are frequently generated by a different 
algorithm that determines when to respond to an auction message, the 
additional ports enable Market Makers to connect to a different server 
that processes auctions and eQuotes rather than forcing them to use 
their Market Maker Standard quote server as a gateway for communicating 
eQuotes to MIAX.
    Because of the technology changes associated with this rule 
proposal, the Exchange will announce the implementation date of the 
proposal in an Exchange Circular to be published no later than 30 days 
after the publication of the notice in the Federal Register. The 
implementation date will be no later than 30 days following publication 
of the Exchange Circular announcing publication of the notice in the 
Federal Register.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \7\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \8\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposal is reasonable and not 
unfairly discriminatory because all Market Makers that subscribe to the 
MIAX System will pay the same monthly fee for two Full Service and Two 
Limited Service MEI Ports per matching engine.
    The Exchange further believes that the no-cost addition of Limited 
Service MEI Ports to the Fee Schedule are equitable and not unfairly 
discriminatory because it enhances the MIAX System and marketplace by 
helping Market Makers to better manage risk, thus preserving the 
integrity of the MIAX markets, all to the benefit of and protection of 
investors and the public as a whole.

B. Self-Regulatory Organization's Statement on Burden on Competition

    MIAX 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, MIAX believes that the additional cost-free 
protection provided to Market Makers and the investing public should 
enhance competition by attracting liquidity and 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.\9\ 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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    \9\ 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-2013-39 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-2013-39. 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 publicly available. All 
submissions should refer to File Number SR-MIAX-2013-39 and should be 
submitted on or before September 4, 2013.


[[Page 49588]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19665 Filed 8-13-13; 8:45 am]
BILLING CODE 8011-01-P