[Federal Register Volume 79, Number 156 (Wednesday, August 13, 2014)]
[Notices]
[Pages 47504-47506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-19094]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72785; File No. SR-MIAX-2014-42]


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

August 7, 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 July 29, 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 Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Options 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.

[[Page 47505]]

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 its Fee Schedule to provide that 
certain orders of affiliates of Members will be included in calculating 
the Monthly Firm Fee Cap. The Exchange recently adopted the Monthly 
Firm Fee Cap that caps transaction fees for the month at $60,000 for 
orders that are entered and executed for an account identified by an 
Electronic Exchange Member for clearing in the OCC ``Firm'' range.\3\ 
The Monthly Firm Fee Cap is based on the similar fees of another 
competing options exchange.\4\
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    \3\ See Securities Exchange Act Release No. 72583 (July 10, 
2014), 79 FR 41612 (July 16, 2014) (SR-MIAX-2014-37).
    \4\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II. See 
also Securities Exchange Act Release Nos. 59393 (February 11, 2009), 
74 FR 7721 (February 19, 2009) (SR-PHLX-2009-12); 65888 (December 5, 
2011), 76 FR 77046 (December 9, 2011) (SR-PHLX-2011-160). See also 
NYSE Amex Options Fee Schedule, p. 17. In contrast to PHLX and NYSE 
MKT, the Exchange does not exclude all dividend, merger, and short 
stock interest strategy executions from the Monthly Firm Fee Cap. In 
addition, in contrast to PHLX, the Exchange does not apply the 
Monthly Firm Fee Cap to proprietary orders effected for the purpose 
of hedging the proprietary over-the-counter trading of an affiliate 
of a Member that qualifies for the Monthly Firm Fee Cap. Further, in 
contrast to PHLX and NYSE MKT which apply to floor and manual 
transactions respectively, since the Exchange is a fully electronic 
exchange and thus does not have a trading floor or manual trading, 
the Monthly Firm Fee Cap applies to electronic Firm transactions.
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    The current transaction fees for Firms on the Exchange are $0.25 
transaction fee for executions in standard option contracts and $0.025 
transaction fee for Mini Option contracts. Pursuant to the Monthly Firm 
Fee Cap, in a single billing month the total amount of transaction fees 
for Firms are capped and thus do not exceed $60,000. Members must 
notify the Exchange in writing of all accounts in which the Member is 
not trading in its own proprietary account. The Exchange does not make 
adjustments to billing invoices where transactions are commingled in 
accounts which are not subject to the Monthly Firm Fee Cap. Mini Option 
contracts are not eligible for inclusion in the Monthly Firm Fee Cap. 
Firm transactions in Mini Options, however, continue to be executed at 
the rate of $0.025 per contract.
    The Exchange proposes to amend the Monthly Firm Fee Cap to allow 
the aggregation of trading activity of separate Members or its 
affiliates for purposes of the Monthly Firm Fee Cap if there is at 
least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A.\5\ Members must notify the Exchange in 
writing of the account(s) designated for purposes of trading in their 
proprietary account. The Member would be required to inform the 
Exchange immediately of any event that causes an entity to cease to be 
an affiliate. In addition, Member must notify the Exchange in writing 
of the account(s) designated for purposes of proprietary trading of 
Member or its affiliates. The Member would be required to segregate 
unaffiliated firm orders from that of its affiliates in order for the 
qualifying affiliated firm orders to be eligible for the Monthly Firm 
Fee Cap. The Exchange will not make adjustments to billing invoices 
where transactions are commingled in accounts which are not subject to 
the Monthly Firm Fee Cap. The Exchange believes that this practice 
would not create an undue burden on its Members and would ensure a more 
efficient billing process.
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    \5\ A Member's total amount of transaction fees in an account 
that clear in the Firm range would be determined at the firm 
affiliated level. E.g., if five EEM individuals are affiliated with 
member firm ABC as reflected by Exchange records for the entire 
month, all the volume from those five individual EEMs will count 
towards firm ABC's Monthly Firm Fee Cap for that month. The Exchange 
and CBOE both aggregate volume of market maker firms with at least 
75% common ownership between the firms. See Securities Exchange Act 
Release Nos. 72565 (July 8, 2014), 79 FR 40807 (July 14, 2014)(SR-
MIAX-2014-31); 55193 (January 30, 2007), 72 FR 5476 (February 6, 
2007) (SR-CBOE-2006-111). See also CBOE Fees Schedule, p. 3.
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    The proposed change to the Monthly Firm Fee Cap is intended to 
create an additional incentive for Firms to send order flow to the 
Exchange. The Exchange believes that the proposal would increase both 
intermarket and intramarket competition by incenting Firms on other 
exchanges to direct additional orders to the Exchange to allow the 
Exchange to compete more effectively with other options exchanges for 
such transactions.
    The Exchange proposes to implement the new transaction fees 
beginning August 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 \6\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \7\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposal is fair, equitable and not 
unreasonably discriminatory. The Exchange believes the proposed rule 
change is reasonable because it would allow aggregation of the trading 
activity of separate Members or its affiliates for purposes of the 
Monthly Firm Fee Cap only in very narrow circumstances, namely, where 
the firm is an affiliate, as defined herein. Furthermore, other 
exchanges, as well as MIAX, have rules that permit the aggregation of 
the trading activity of affiliated entities for the purposes of 
calculating and assessing certain fees. The Exchange believes that it 
is reasonable to require Members to segregate these transactions in a 
separate account to create an effective way to account and bill for 
these transactions. The Exchange believes that its proposal is 
equitable and not unfairly discriminatory because any Member may 
request that the Exchange aggregate its trading activity with the 
trading activity of an affiliated firm for purposes of calculating the 
Monthly Firm Fee Cap. The Exchange believes that it is equitable and 
not unfairly discriminatory to require Members to segregate these 
transactions in a separate account as this requirement would apply to 
all member organizations.

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 is similar to the 
transaction fees found on other options exchanges; therefore, the 
Exchange believes the proposal is consistent with robust competition by 
increasing the intermarket competition for order flow from Firms. To 
the extent that there is additional competitive burden on non-Firm 
Members, the Exchange believes that this is appropriate because the 
proposal should incent Members to direct additional order flow to the 
Exchange and thus provide additional liquidity that enhances the 
quality of its markets and increases the volume of contracts traded 
here. To the extent that this purpose is achieved, all the Exchange's 
market participants should benefit from the improved market liquidity. 
Enhanced market quality and increased transaction volume that results 
from the anticipated increase in order flow directed to the Exchange 
will benefit all market participants and improve competition on the 
Exchange. The Exchange notes that it operates in a highly competitive 
market in which market participants can readily favor competing venues 
if they deem fee

[[Page 47506]]

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.\8\ 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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    \8\ 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-2014-42 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-2014-42. 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-2014-42 and should be 
submitted on or before September 3, 2014].

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-19094 Filed 8-12-14; 8:45 am]
BILLING CODE 8011-01-P