[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Notices]
[Pages 16044-16046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06889]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74555; File No. SR-MIAX-2015-20]


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

March 20, 2015.
    Pursuant to 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 11, 2015, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the 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.

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 current MIAX Market Maker \3\ 
sliding scale for transaction fees to: (i) Adopt transaction fees for 
non-Penny Pilot options classes; and (ii) provide for additional 
incentives for achieving certain Priority Customer Rebate Program 
volume tiers.
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    \3\ ``MIAX Market Maker'' for purposes of the proposed sliding 
scale means any MIAX Market Maker including RMM, LMM, PLMM, DLMM, 
and DPLMM.
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    The sliding scale for MIAX Market Maker transaction fees is based 
on the substantially similar fees of the Chicago Board Options 
Exchange, Incorporated (``CBOE'').\4\ Currently, the program reduces a 
MIAX Market Maker's per contract transaction fee based on percentages 
of total national Market Maker volume of any options classes that trade 
on the exchange during the calendar month, based on the following 
scale:
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    \4\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 57191 
(January 24, 2008), 73 FR 5611 (January 30, 2008); 58321 (August 6, 
2008), 73 FR 46955 (SR-CBOE-2008-78). See also CBOE Fees Schedule, 
p. 3. The Exchange notes that CBOE does not charge market makers a 
differentiated transaction fee for non-Penny Pilot option classes.

------------------------------------------------------------------------
                                                             Transaction
             Tier                  Percentage of national      fee per
                                    Market Maker volume        contract
------------------------------------------------------------------------
1.............................  0.00%-0.05%................        $0.25
2.............................  Above 0.05%-0.50%..........         0.17
3.............................  Above 0.50%-0.80%..........         0.12
4.............................  Above 0.80%-1.50%..........         0.07
5.............................  Above 1.50%................         0.05
------------------------------------------------------------------------

    The Exchange proposes to amend its current MIAX Market Maker 
sliding scale for transactions to adopt transaction fees for non-Penny 
Pilot options classes. Specifically, the Exchange proposes to reduce a 
MIAX Market Maker's per contract transaction fee based on percentages 
of total national Market Maker volume of any options classes that trade 
on the exchange during the calendar month, based on the following 
scale:

------------------------------------------------------------------------
                                                              Non-Penny
                                                                Pilot
                                   Percentage of national      classes
             Tier                   Market Maker volume      transaction
                                                               fee per
                                                               contract
------------------------------------------------------------------------
1.............................  0.00%-0.05%................        $0.29
2.............................  Above 0.05%-0.50%..........         0.21
3.............................  Above 0.50%-0.80%..........         0.16
4.............................  Above 0.80%-1.50%..........         0.11
5.............................  Above 1.50%................         0.09
------------------------------------------------------------------------

    The proposed sliding scale would apply to all MIAX Market Makers 
for transactions in all non-Penny Pilot options classes except mini-
options. A MIAX Market Maker's initial $0.29 per contract rate will be 
reduced if the MIAX Market Maker reaches the volume thresholds set 
forth in the sliding scale

[[Page 16045]]

in a month. As a MIAX Market Maker's monthly volume increases, its per 
contract transaction fee would decrease. The Market Maker sliding scale 
will continue to apply to MIAX Market Maker (RMM, LMM, DLMM, PLMM, 
DPLMM) transaction fees in all non-Penny Pilot options classes except 
mini-options. MIAX Market Makers will continue to be assessed a $0.02 
per executed contract fee for transactions in mini-options. The 
Exchange notes that MIAX Market Makers will continue to be assessed 
transactions fees for Penny Pilot options classes pursuant to the 
current Market Maker sliding scale.\5\
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    \5\ See MIAX Options Fee Schedule, Section 1(a)(i). 
Specifically, MIAX Market Makers will be assessed $0.25 per contract 
for tier 1, $0.17 per contract for tier 2, $0.12 per contract for 
tier 3, $0.07 per contract for tier 4, and $0.05 per contract for 
tier 5 for transactions in standard options in Penny Pilot options 
classes as currently provided in the Market Maker sliding scale.
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    The Exchange believes the proposed sliding scale for non-Penny 
Pilot options classes is objective in that the fee reductions are based 
solely on reaching stated volume thresholds. The specific volume 
thresholds of the tiers were set based upon business determinations and 
an analysis of current volume levels. The specific volume thresholds 
and rates were set in order to encourage MIAX Market Makers to reach 
for higher tiers. The Exchange believes that the proposed changes to 
the tiered fee schedule may incent firms to display their orders on the 
Exchange and increase the volume of contracts traded here in order to 
qualify for lower fee rates in the higher tiers.
    As mentioned above, the Exchange notes that the proposed sliding 
fee scale for MIAX Market Makers structured on contract volume 
thresholds is based on the substantially similar fees of the CBOE.\6\ 
The Exchange also notes that a number of other exchanges have tiered 
fee schedules which offer different transaction fee rates depending on 
the monthly ADV of liquidity providing executions on their 
facilities.\7\
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    \6\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 58321 
(August 6, 2008), 73 FR 46955 (SR-CBOE-2008-78); 71295 (January 14, 
2014), 79 FR 3443 (January 21, 2014) (SR-CBOE-2013-129). The 
Exchange notes that CBOE does not charge market makers a 
differentiated transaction fee for non-Penny Pilot option classes.
    \7\ See, e.g., International Securities Exchange, LLC, Schedule 
of Fees, Section IV, C; NASDAQ Options Market, Chapter XV, Section 
2.
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    The Exchange proposes to offer MIAX Market Makers 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. As proposed, 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 MIAX Market Maker will be assessed 
$0.27 per contract for tier 1, $0.19 per contract for tier 2, $0.14 per 
contract for tier 3, $0.09 per contract for tier 4, and $0.07 per 
contract for tier 5 for transactions in standard options in non-Penny 
Pilot options classes in lieu of the applicable transaction fees in the 
Market Maker sliding scale.
    The Exchange believes that these incentives will encourage MIAX 
Market Makers to transact a greater number of orders on the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \8\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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 a similar manner today in other types of 
transaction fees.\10\
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    \10\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II 
(assessing differentiated transaction fees for Penny Pilot and non-
Penny Pilot options classes); NYSE Amex Options Fee Schedule, p. 6 
(assessing differentiated transaction fees for Penny Pilot and non-
Penny Pilot options classes); Chicago Board Options Exchange, 
Incorporated, Fee Schedule, p. 1 (assessing differentiated 
transaction fees for Penny Pilot and non-Penny Pilot options 
classes). See also Securities Exchange Act Release No. 68556 
(January 2, 2013), 78 FR 1293 (January 8, 2013) (SR-BX-2012-074). 
Please note that neither of these exchanges currently has 
differentiated pricing for non-Penny Pilot options classes in a 
tiered volume scale for market makers.
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    The proposed volume based discount fee structure is not 
discriminatory in that all MIAX Market Makers are eligible to submit 
(or not submit) liquidity, and may do so at their discretion in the 
daily volumes they choose during the course of the billing period. All 
similarly situated MIAX Market Makers are subject to the same fee 
structure, and access to the Exchange is offered on terms that are not 
unfairly discriminatory. Volume based discounts have been widely 
adopted by options and equities markets, and are equitable because they 
are open to all MIAX Market Makers on an equal basis and provide 
discounts that are reasonably related to the value of an exchange's 
market quality associated with higher volumes. The proposed fee levels 
and volume thresholds are reasonably designed to be comparable to those 
of other options exchanges employing similar fee programs, and also to 
attract additional liquidity and order flow to the Exchange.
    The Exchange's proposal to provide MIAX Market Makers the 
opportunity to reduce transaction fees by $0.02 per contract in 
standard options in non-Penny Pilot option 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 the 
opportunity to reduce transaction fees by $0.02 per contract in 
standard options in non-Penny Pilot option classes, provided certain 
criteria are met, is equitable and not unfairly discriminatory because 
the Exchange offers 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.

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 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 
proposed rule change reflects this competitive environment because it 
modifies the Exchange's fees in a manner that

[[Page 16046]]

encourages market participants to provide liquidity and to send 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.\11\ 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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    \11\ 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-2015-20 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-2015-20. 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 offices 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-2015-20, 
and should be submitted on or before April 16, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06889 Filed 3-25-15; 8:45 am]
 BILLING CODE 8011-01-P