[Federal Register Volume 79, Number 134 (Monday, July 14, 2014)]
[Notices]
[Pages 40798-40801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16369]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72561; File No. SR-MIAX-2014-35]


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

July 8, 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 June 25, 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

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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 its Fee Schedule. 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 to reduce several 
testing and certification fees and System connectivity fees for non-
Members. Specifically, the Exchange proposes to: (i) Reduce the non-
Member API testing and certification fee; (ii) reduce the non-Member 
networking and certification fees; (iii) eliminate the fees for non-
Members to test and certify additional connections; and (iv) reduce the 
non-Member networking connectivity fee.
API Testing and Certification
    The Exchange assesses a one-time Application Programming Interface 
(``API'') testing and certification fee on non-Members. Specifically, 
the Exchange assesses a one-time API Testing and Certification fee of 
$5,000.00 on third party vendors \3\ and Service Bureaus \4\ whose 
software interfaces with MIAX software. The API makes it possible for 
third party vendors' and Service Bureaus' software to communicate with 
MIAX software applications, and is subject to testing with, and 
certification by, the Exchange. The Exchange originally established a 
higher fee for non-Members to reflect the greater amount of time spent 
by Exchange employees testing and certifying non-Members.\5\ Up to that 
point, it had been the Exchange's experience that Member testing takes 
less time than non-Member testing because Members have more experience 
testing these systems with exchanges; generally fewer questions and 
issues arise during the testing and certification process.\6\ Also, 
because third party vendors and Service Bureaus are redistributing data 
and reselling services to other Members and market participants the 
number and types of scenarios that need to be tested are more numerous 
and complex than those tested and certified for a single Member.\7\ 
Although the cost to the Exchange to provide this service to non-
Members remains higher than for Members, the Exchange proposes to 
reduce the API testing and certification fee to $1,000, the same price 
as EEMs in order to incent more non-Members to use the service.\8\
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    \3\ Third party vendors are subscribers of MIAX's market and 
other data feeds, which they in turn use for redistribution 
purposes. Third party vendors do not provide connectivity and 
therefore are not subject to Network testing and certification.
    \4\ 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. The technology and 
technology services supplied by Service Bureaus includes both 
software applications and connectivity, thus Service Bureaus are 
subject to both API testing and certification and Network testing 
and certification.
    \5\ See Securities Exchange Act Release No. 68645 (January 14, 
2013), 78 FR 4175 (January 18, 2013) (SR-MIAX-2012-05).
    \6\ Id.
    \7\ Id.
    \8\ Notwithstanding the proposal reducing the fees for providing 
this service to non-Members despite the higher cost, the Exchange 
represents that it will continue to have adequate resources to fund 
its regulatory program and fulfill its responsibilities as a self-
regulatory organization while the reduced fees are in effect.
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Non-Member Network Testing and Certification Fee
    The Exchange assesses a one-time Network Testing and Certification 
fee on Service Bureaus and Extranet Providers.\9\ Specifically, the 
Exchange assesses a one-time Service Bureaus and Extranet Providers fee 
of $2,000.00 for the initial one Gigabit connection and $1,000 for each 
additional one Gigabit connection and $6,000.00 for the initial ten 
Gigabit connection and $4,000.00 for each additional ten Gigabit 
connection. The non-Member Network Testing and Certification fees 
represent installation and support costs incurred by the Exchange as it 
works with each non-Member to make sure there are appropriate 
electronic connections with the Exchange. The Exchange originally 
established a higher fee for non-Members to reflect the greater amount 
of time spent by the Exchange employees testing and certifying non-
Members.\10\ Up to that point, it had been the Exchange's experience 
that Member network connectivity testing takes less time than non-
Member network connectivity testing because Members have more 
experience testing these systems with exchanges; generally fewer 
questions and issues arise during the testing and certification 
process.\11\ In addition, non-Members are charged a discounted Network 
Testing and Certification Fee for additional connections because each 
connection will be used by different customers of the non-Member 
Service Bureaus and Extranet Providers and will need to be individually 
tested requiring more Exchange resources for testing and certification. 
Although the cost to the Exchange to provide this service to non-
Members remains higher than for Members, the Exchange proposes to 
reduce the Network Testing and Certification Fee to $1,000.00 per 
Member [sic] for a one Gigabit connection, and $4,000.00 per Member 
[sic] for a ten Gigabit connection in order to incent more non-Members 
to use the service.\12\ In addition, the Exchange proposes not to 
charge non-Members a Testing and Certification Fee for any additional 
connections they obtain. This will align the pricing of these services 
for non-Members with the current charges for Members.
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    \9\ An Extranet Provider is a technology provider that connects 
with MIAX systems and in turn provides such connectivity to MIAX 
participants that do not connect directly with MIAX. Extranet 
Providers do not provide software interfaces with MIAX software 
applications, thus Extranet Providers are not subject to API testing 
and certification.
    \10\ Id.
    \11\ Id.
    \12\ Notwithstanding the proposal reducing the fees for 
providing this service to non-Members despite the higher cost, the 
Exchange represents that it will continue to have adequate resources 
to fund its regulatory program and fulfill its responsibilities as a 
self-regulatory organization while the reduced fees are in effect.
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Non-Member Network Connectivity Fees
    The Exchange assesses fees to Service Bureaus, and Extranet 
Providers for electronic connections \13\ between those entities and 
the Exchange. The Connectivity fees are based upon the amount of 
bandwidth that will be used by the Service Bureau, or Extranet 
Provider. Specifically, the Exchange

[[Page 40800]]

assesses a monthly non-Member Network Connectivity fee to Service 
Bureaus and Extranet Providers of $2,000.00 for a one Gigabit 
connection, and $10,000.00 for a ten Gigabit connection. The Exchange 
originally established a higher fee to Service Bureaus and Extranet 
Providers than to Members to reflect the fact that Service Bureaus and 
Extranet Providers serve as conduits to MIAX Members and non-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 Members and non-Members using the 
services of such third party providers. Although the cost to the 
Exchange to provide this service to non-Members remains higher than for 
Members, the Exchange proposes to lower the monthly non-Member Network 
Connectivity fee for Service Bureaus and Extranet Providers to 
$1,000.00 for a one Gigabit connection, and $5,000.00 for a ten Gigabit 
connection, the level as currently charged to Members in order to 
incent more non-Members to use the service.\14\
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    \13\ For purposes of this proposed rule change, the terms 
``connectivity'' and ``connections'' refer to the physical 
connections between Member and non-Member electronic networks and 
the MIAX systems.
    \14\ Notwithstanding the proposal reducing the fees for 
providing this service to non-Members despite the higher cost, the 
Exchange represents that it will continue to have adequate resources 
to fund its regulatory program and fulfill its responsibilities as a 
self-regulatory organization while the reduced fees are in effect.
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    The Exchange proposes to implement the new fee beginning July 1, 
2014.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \15\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \16\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed fees are a reasonable allocation 
of its costs and expenses among its Members and other persons using its 
facilities since it is recovering the costs associated with providing 
such infrastructure testing and certification services, and with 
offering access through the network connections and access and services 
through the Ports, responding to customer requests, configuring MIAX 
systems, programming API user specifications and administering the 
various services connectivity services. Access to the Exchange is 
provided on fair and non-discriminatory terms. The proposed fees are 
reasonable since they are in the range of similar fees charged by 
another exchange. The Exchange believes the proposed fees are equitable 
and not unfairly discriminatory because the new fee levels result in a 
more reasonable and equitable allocation of fees amongst non-Members 
and Members for similar services.

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 proposal will allow the 
Exchange to reduce non-Member fees to align them with similar fees 
charged to Member and thus should promote competition amongst these 
participants for these types of services. The proposal also reduces 
fees in a manner that should improve competition with another competing 
exchange by changing its rate to the same level. The Exchange notes 
that it operates in a highly competitive market in which market 
participants can readily favor competing venues 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. The Exchange believes that 
the proposal reflects this competitive environment.

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\ 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).
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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-2014-35 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-2014-35. 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-2014-35 and should be 
submitted on or before August 4, 2014. For the Commission, by the 
Division of Trading

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and Markets, pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16369 Filed 7-11-14; 8:45 am]
BILLING CODE 8011-01-P