[Federal Register Volume 79, Number 175 (Wednesday, September 10, 2014)]
[Notices]
[Pages 53792-53794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21523]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72989; File No. SR-MIAX-2014-47]


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

September 4, 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 August 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 
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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Fee Schedule to: (i) Adopt 
transaction fees for market participants in non-Penny Pilot options 
classes; (ii) provide for additional incentives for achieving certain 
Priority Customer Rebate Program volume tiers; and (iii) to make a 
minor technical change to delete obsolete language. The proposed 
changes are based on the similar fees of other competing options 
exchange.\3\
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    \3\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NYSE 
Amex Options Fee Schedule, p. 4; Chicago Board Options Exchange, 
Incorporated, Fee Schedule, p. 2. See also Securities Exchange Act 
Release No. 68556 (January 2, 2013), 78 FR 1293 (January 8, 2013) 
(SR-BX-2012-074).
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    The Exchange proposes to adopt transaction fees for Public 
Customers that are not a Priority Customer, Non-MIAX Market Makers, 
Non-Member Broker-Dealers, and Firms in non-Penny Pilot options 
classes. Specifically, the Exchange proposes to assess the following 
fees for transactions in non-Penny Pilot options classes: (i) Public 
Customers that are not a Priority Customer, $0.32 per contract for 
standard options and $0.03 per contract for mini options; (ii) Non-MIAX 
Market Makers, $0.62 per contract for standard options and $0.06 per 
contract for mini options; (iii) Non-Member Broker-Dealers, $0.62 per 
contract for standard options and $0.06 per contract for mini options; 
and (iv) Firms, $0.32 per contract for standard options and $0.03 per 
contract for mini options. The Exchange notes that the transaction fees 
for Priority Customers and Market Makers will not change and thus both 
will continue to be charged the same amount for non-Penny Pilot options 
classes and Penny Pilot options classes as they do today.
    The Exchange proposes to offer MIAX Market Makers, Public Customers 
that are not a Priority Customer, Non-MIAX Market Makers, Non-Member 
Broker-Dealers, and Firms the opportunity to reduce transaction fees by 
$0.02 per contract in standard options in non-Penny Pilot options 
classes in the same manner as Penny Pilot options classes.\4\ 
Specifically, any Member or its affiliates of at least 75% common 
ownership between the firms as reflected on each firm's Form BD, 
Schedule A, that qualifies for Priority Customer Rebate Program volume 
tiers 3, 4, or 5 and is a Public Customers that are not a Priority 
Customer or Firm will be assessed $0.30 per contract for standard 
options in non-Penny Pilot options classes. Further, any Member or its 
affiliates of at least 75% common ownership between the firms as 
reflected on each firm's Form BD, Schedule A, that qualifies for 
Priority Customer Rebate Program volume tiers 3, 4, or 5 and is a Non-
MIAX Market Makers or Non-Member Broker-Dealers will be assessed $0.60 
per contract for standard options in non-Penny Pilot options classes. 
The Exchange believes that these incentives will encourage MIAX Market 
Makers, Public Customers that are not a Priority Customer, Non-MIAX 
Market Makers, Non-Member Broker-Dealers, and Firms to transact a 
greater number of orders on the Exchange.
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    \4\ See SR-MIAX-2014-46.
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    The Exchange also proposes a technical change to delete an obsolete 
fee and date from the Options Regulatory Fee schedule of the Fee 
Schedule. The Exchange believes that this change will reduce the 
potential of confusion on behalf of market participants.
    The Exchange proposes to implement the new transaction fees 
beginning September 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 \5\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposal to assess transaction fees 
in non-Penny Pilot options classes, which differs from Penny Pilot 
options classes, is consistent with other options markets that also 
assess different transaction fees for non-Penny Pilot options classes 
as compared to Penny Pilot options classes. The Exchange believes that 
establishing different pricing for non-Penny Pilot options and Penny 
Pilot options is reasonable, equitable, and not unfairly discriminatory 
because Penny Pilot options are more liquid options as compared to non-
Penny Pilot options. Additionally, other competing options exchanges 
differentiate pricing in the similar manner today.\7\
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    \7\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NYSE 
Amex Options Fee Schedule, p. 4; Chicago Board Options Exchange, 
Incorporated, Fee Schedule, p. 2. See also Securities Exchange Act 
Release No. 68556 (January 2, 2013), 78 FR 1293 (January 8, 2013) 
(SR-BX-2012-074).
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    The Exchange's proposal to increase the transaction fees for Public

[[Page 53793]]

Customers that are not a Priority Customer, Non-MIAX Market Makers, 
Non-Member Broker-Dealers, and Firms in non-Penny Pilot options classes 
is reasonable because the Exchange's fees will remain competitive with 
and in the range of similar transaction fees at other options 
exchanges.\8\ The Exchange's proposal to increase the transaction fees 
for Public Customers that are not a Priority Customer, Non-MIAX Market 
Makers, Non-Member Broker-Dealers, and Firms in non-Penny Pilot options 
classes is equitable and not unfairly discriminatory because the 
increase applies equally to all such market participants, in each 
category of market participant. The Exchange does not assess Priority 
Customers transactions 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 and other market participants. 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. Market Makers are assessed lower 
transaction fees as compared to Public Customers that are not a 
Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers, 
and Firms because they have obligations to the market and regulatory 
requirements, which normally do not apply to other market 
participants.\9\ They have obligations to make continuous markets, 
engage in a course of dealings reasonably calculated to contribute to 
the maintenance of a fair and orderly market, and not make bids or 
offers or enter into transactions that are inconsistent with a course 
of dealings. In addition, charging non-members higher transaction fees 
is a common practice amongst exchanges because Members are subject to 
other fees and dues associated with their membership to the Exchange 
that do not apply to non-members. The proposed differentiation as 
between Priority Customers, Market Makers, and other market 
participants recognizes the differing contributions made to the 
liquidity and trading environment on the Exchange by these market 
participants.
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    \8\ Id.
    \9\ See Exchange Rules 603 and 604.
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    The Exchange's proposal to offer MIAX Market Makers, Public 
Customers that are not a Priority Customer, Non-MIAX Market Makers, 
Non-Member Broker-Dealers, and Firms the opportunity to reduce 
transaction fees by $0.02 per contract in standard options in non-Penny 
Pilot options classes in the same manner as Penny Pilot options 
classes, provided certain criteria are met, is reasonable because the 
Exchange desires to offer all such market participants an opportunity 
to lower their transaction fees. The Exchange's proposal to offer MIAX 
Market Makers, Public Customers that are not a Priority Customer, Non-
MIAX Market Makers, Non-Member Broker-Dealers, and Firms the 
opportunity to reduce transaction fees by $0.02 per contract in 
standard options in non-Penny Pilot options classes, provided certain 
criteria are met, is equitable and not unfairly discriminatory because 
the Exchange will offer all market participants, excluding Priority 
Customers, a means to reduce transaction fees by qualifying for volume 
tiers in the Priority Customer Rebate Program. The Exchange believes 
that offering all such market participants the opportunity to lower 
transaction fees by incentivizing them to transact Priority Customer 
order flow in turn benefits all market participants.
    The Exchange believes that the proposal to allow the aggregation of 
trading activity of separate Members or its affiliates for purposes of 
the fee reduction 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 fee reduction 
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 offering all such market 
participants the opportunity to lower transaction fees by incentivizing 
them to transact Priority Customer order flow in turn benefits all 
market participants.
    Finally, the Exchange believes that technical changes to delete an 
obsolete fee and date from the Options Regulatory Fee schedule of the 
Fee Schedule will protect investors and the public interest by 
eliminating potential confusion that could be caused by the existing 
language used to describe the Options Regulatory Fee.

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 market 
participants. To the extent that there is additional competitive burden 
on non-member market participants, the Exchange believes that this is 
appropriate because charging non-members higher transaction fees is a 
common practice amongst exchanges and Members are subject to other fees 
and dues associated with their membership to the Exchange that do not 
apply to non-members. To the extent that there is additional 
competitive burden on market participants that are not Priority 
Customers or Market Makers, 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 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.\10\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend

[[Page 53794]]

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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    \10\ 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-2014-47 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-2014-47. 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-2014-47 and should be 
submitted on or before October 1, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21523 Filed 9-9-14; 8:45 am]
BILLING CODE 8011-01-P