[Federal Register Volume 80, Number 155 (Wednesday, August 12, 2015)]
[Notices]
[Pages 48382-48385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19761]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75631; File No. SR-MIAX-2015-51]


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

August 6, 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 August 5, 2015, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') 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 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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'').
    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 Fee Schedule to (i) establish an 
additional transaction fee rebate for Priority Customer \3\ orders 
submitted by Members that meet certain percentage thresholds of 
national customer volume in multiply-listed options classes listed on 
MIAX; and (ii) establish new monthly volume thresholds in such option 
classes in the Priority Customer Rebate Program (the ``Program'').\4\
---------------------------------------------------------------------------

    \3\ The term ``Priority Customer'' means a person or entity that 
(i) is not a broker or dealer in securities, and (ii) does not place 
more than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s). See Exchange Rule 
100.
    \4\ See Securities Exchange Act Release Nos. 74758 (April 17, 
2015), 80 FR 22756 (April 23, 2015) (SR-MIAX-2015-27); 74007 
(January 9 [sic], 2015), 80 FR 1537 (January 12, 2015) (SR-MIAX-
2014-69); 72799 (August 8, 2014), 79 FR 47698 (August 14, 2014) (SR-
MIAX-2014-40); 72355 (June 10, 2014), 79 FR 34368 (June 16, 2014) 
(SR-MIAX-2014-25); 71698 (March 12, 2014), 79 FR 15185 (March 18, 
2014) (SR-MIAX-2014-12); 71283 (January 10, 2014), 79 FR 2914 
(January 16, 2014) (SR-MIAX-2013-63); 71009 (December 6, 2013), 78 
FR 75629 (December 12, 2013) (SR-MIAX-2013-56).
---------------------------------------------------------------------------

Priority Customer Rebate Program
    Currently, the Exchange credits each Member the per contract amount 
resulting from each Priority Customer order transmitted by that Member 
that is executed electronically on the Exchange in all multiply-listed 
option classes (excluding Qualified Contingent Cross Orders,\5\ mini-
options,\6\ Priority Customer-to-Priority Customer Orders, PRIME 
Auction Or Cancel Responses, PRIME Contra-side Orders, PRIME Orders for 
which both the Agency and Contra-side Order are Priority Customers,\7\ 
and executions related to contracts that are routed to one or more 
exchanges in connection with the Options Order Protection and Locked/
Crossed Market Plan referenced in MIAX Rule 1400)), provided the Member 
meets certain tiered percentage thresholds in a month as described in 
the Priority Customer Rebate Program table.\8\ For each Priority 
Customer order transmitted by that Member which is executed 
electronically on the Exchange in MIAX Select Symbols, MIAX will 
continue to credit each member at the separate per contract rate for 
MIAX Select Symbols.\9\ For each Priority Customer order submitted into 
the PRIME Auction as a PRIME Agency Order, MIAX will continue to credit 
each member at the separate per contract rate for PRIME Agency 
Orders.\10\ The volume thresholds are calculated based on the customer 
volume over the course of the month. Volume will be recorded for and 
credits

[[Page 48383]]

will be delivered to the Member Firm that submits the order to the 
Exchange.
---------------------------------------------------------------------------

    \5\ A Qualified Contingent Cross Order is comprised of an 
originating order to buy or sell at least 1,000 contracts, or 10,000 
mini-option contracts, that is identified as being part of a 
qualified contingent trade, as that term is defined in 
Interpretations and Policies .01 below, coupled with a contra-side 
order or orders totaling an equal number of contracts. A Qualified 
Contingent Cross Order is not valid during the opening rotation 
process described in Rule 503. See Exchange Rule 516(j).
    \6\ A mini-option is a series of option contracts with a 10 
share deliverable on a stock, Exchange Traded Fund share, Trust 
Issued Receipt, or other Equity Index-Linked Security. See Exchange 
Rule 404, Interpretations and Policies .08.
    \7\ The MIAX Price Improvement Mechanism (``PRIME'') is a 
process by which a Member may electronically submit for execution 
(``Auction'') an order it represents as agent (``Agency Order'') 
against principal interest, and/or an Agency Order against solicited 
interest. For a complete description of PRIME and of PRIME order 
types and responses, see Exchange Rule 515A.
    \8\ See MIAX Fee Schedule Section (1)(a)(iii).
    \9\ See Securities Exchange [sic] Release Nos. 74291 (February 
18, 2015), 80 FR 9841 (February 24, 2015) (SR-MIAX-2015-09); 74288 
(February 18, 2015), 80 FR 9837 (February 24, 2015) (SR-MIAX-2015-
08); 71700 (March 12, 2014), 79 FR 15188 (March 18, 2014) (SR-MIAX-
2014-13); 72356 (June 10, 2014), 79 FR 34384 (June 16, 2014) (SR-
MIAX-2014-26); 72567 (July 8, 2014), 79 FR 40818 (July 14, 2014) 
(SR-MIAX-2014-34); 73328 (October 9, 2014), 79 FR 62230 (October 16, 
2014) (SR-MIAX-2014-50).
    \10\ See Securities Exchange [sic] Release No. 72943 (August 28, 
2014), 79 FR 52785 (September 4, 2014) (SR-MIAX-2014-45).
---------------------------------------------------------------------------

    The amount of the rebate is calculated beginning with the first 
executed contract at the applicable threshold per contract credit with 
rebate payments made at the highest achieved volume tier for each 
contract traded in that month. For example, under the current Program, 
a Member that executes a number of Priority Customer contracts equal to 
2.40% of the national customer volume in multiply-listed options during 
a particular calendar month, such Member will currently receive a 
credit of $0.17 for each Priority Customer contract executed during 
that month, even though there are lower incremental percentages for 
lower volume tiers leading up to the 2.4% volume threshold.
    The current Priority Customer Rebate Program table designates the 
following monthly volume tiers and corresponding per contract credits

----------------------------------------------------------------------------------------------------------------
  Percentage thresholds of national customer volume in      Per contract       Per contract       Per contract
     multiply-listed options classes listed on MIAX         credit (non-      credit in MIAX    credit for PRIME
                       (monthly)                          select  symbols)    select symbols      agency order
----------------------------------------------------------------------------------------------------------------
0.00%-0.40%............................................              $0.00              $0.00              $0.10
Above 0.40%-0.75%......................................               0.10               0.10               0.10
Above 0.75%-1.75%......................................               0.15               0.20               0.10
Above 1.75%-2.40%......................................               0.17               0.20               0.10
Above 2.40%............................................               0.18               0.20               0.10
----------------------------------------------------------------------------------------------------------------

Proposal
    The Exchange proposes to amend Section (1)(a)(iii) of its Fee 
Schedule to reflect a new schedule of percentage thresholds of national 
customer volume, and new corresponding monthly per contract credits. 
Specifically, the new thresholds will be as set forth in the following 
table:

----------------------------------------------------------------------------------------------------------------
  Percentage thresholds of national customer volume in      Per contract       Per contract       Per contract
     multiply-listed options classes listed on MIAX        credit  (non-      credit in MIAX    credit for PRIME
                       (monthly)                          select  symbols)    select symbols      agency order
----------------------------------------------------------------------------------------------------------------
0.00%-0.50%............................................              $0.00              $0.00              $0.10
Above 0.50%-1.00%......................................               0.10               0.10               0.10
Above 1.00%-1.75%......................................               0.15               0.20               0.10
Above 1.75%............................................          \11\ 0.17               0.20               0.10
----------------------------------------------------------------------------------------------------------------

    The Exchange believes that the proposed new monthly volume tiers 
and corresponding credits should provide incentives for Members to 
direct greater Priority Customer trade volume to the Exchange.
---------------------------------------------------------------------------

    \11\ The $0.17 per contract credit described in Tier 4 will be 
applied to each contract traded in non-Select Symbols in that month, 
beginning with the first contract executed in a particular month if 
the Tier 4 volume threshold is achieved. In addition to the $0.17 
rebate, a supplemental rebate of $0.03 per contract will be applied 
to contracts executed in excess of 1.75% of the monthly national 
volume.
---------------------------------------------------------------------------

MIAX Select Symbols
    The proposed new monthly volume thresholds and per contract credits 
will apply to MIAX Select Symbols,\12\ with the per contract credit 
increasing for certain monthly volume thresholds. The monthly per 
contract rebate will remain at $0.20 for all contracts executed in 
Select Symbols when the 1.00 percent threshold is exceeded for all 
applicable symbols.
---------------------------------------------------------------------------

    \12\ The term ``MIAX Select Symbols'' means options overlying 
AA, AAL, AAPL, AIG, AMAT, AMD, AMZN, BA, BABA, BBRY, BIDU, BP, C, 
CAT, CBS, CELG, CLF, CVX, DAL, EBAY, EEM, FB, FCX, GE, GILD, GLD, 
GM, GOOGL, GPRO, HAL, HTZ, INTC, IWM, JCP, JNJ, JPM, KMI, KO, MO, 
MRK, NFLX, NOK, NQ, ORCL, PBR, PFE, PG, QCOM, QQQ, RIG, S, SPY, 
SUNE, T, TSLA, USO, VALE, VXX, WBA, WFC, WMB, WY, X, XHB, XLE, XLF, 
XLP, XOM, XOP and YHOO. See Fee Schedule, note 13.
---------------------------------------------------------------------------

    The Exchange also proposes to delete Tier 5 of the Priority 
Customer Rebate Program, which currently affords a rebate of $0.17 
[sic] per contract for contracts executed when the total volume for the 
month exceeds of 2.4% of the national customer volume. Under the 
proposal, all contracts (other than Select Symbols) traded in a 
particular month when the Tier 4 volume threshold of 1.75% of the 
national monthly customer volume is exceeded will receive a credit of 
$0.17, and contracts executed in non-Select symbols in excess of 1.75% 
of national monthly customer volume will receive a supplemental rebate 
of $0.03 per contract. The Exchange believes that this new, increased 
rebate obviates the need for the Tier 5 threshold. The Exchange is 
proposing amendments to the Fee Schedule to delete references to the 
Tier 5 threshold throughout.
    All other aspects of the Program will remain unchanged. The 
Exchange is not proposing any change to the per contract credit for 
PRIME Agency Orders. Consistent with the current Fee Schedule, the 
Exchange will continue to aggregate the contracts resulting from 
Priority Customer orders transmitted and executed electronically on the 
Exchange from affiliated Members for purposes of the thresholds above, 
provided there is at least 75% common ownership between the firms as 
reflected on each firm's Form BD, Schedule A. In the event of a MIAX 
System outage or other interruption of electronic trading on MIAX, the 
Exchange will adjust the national customer volume in multiply-listed 
options for the duration of the outage. A Member may request to receive 
its credit under the Priority Customer Rebate Program as a separate 
direct payment.
    The purpose of the proposed rule change is to encourage Members to 
direct greater Priority Customer trade volume to the Exchange. The 
Exchange believes that increased Priority Customer volume will attract 
more liquidity to the Exchange, which benefits all market participants. 
Increased retail customer order flow should attract professional 
liquidity providers (Market Makers), which in turn should make the MIAX 
marketplace an attractive venue where Market Makers will submit narrow 
quotations with greater size, deepening and enhancing the quality of 
the MIAX marketplace. This should provide more trading opportunities 
and tighter spreads for other market participants and result in a 
corresponding increase

[[Page 48384]]

in order flow from such other market participants.
    The specific volume thresholds of the Program's tiers are set based 
upon business determinations and an analysis of current volume levels. 
The volume thresholds are intended to incentivize firms to increase the 
number of Priority Customer orders they send to the Exchange so that 
they can achieve the next threshold, and to encourage new participants 
to send Priority Customer orders as well. Increasing the number of 
orders sent to the Exchange will in turn provide tighter and more 
liquid markets, and therefore attract more business overall. Similarly, 
the different credit rates at the different tier levels are based on an 
analysis of current revenue and volume levels and are intended to 
provide increasing ``rewards'' to MIAX participants for increasing the 
volume of Priority Customer orders sent to, and Priority Customer 
contracts executed on, the Exchange. The specific amounts of the tiers 
and rates are set in order to encourage suppliers of Priority Customer 
order flow to reach for higher tiers.
    The credits paid out as part of the program will be drawn from the 
general revenues of the Exchange.\13\ The Exchange calculates volume 
thresholds on a monthly basis.
---------------------------------------------------------------------------

    \13\ Despite providing credits under the Program, 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 Program is in effect.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \14\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \15\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposal is fair, equitable and not 
unreasonably discriminatory. The Program and the proposed increase in 
the per contract rebate is reasonably designed because it will 
encourage providers of Priority Customer order flow to send that 
Priority Customer order flow to the Exchange in order to receive an 
increasing per contract credit with each volume tier achieved. The 
Exchange believes that the proposed new tier structure and supplemental 
rebate should improve market quality for all market participants. The 
proposed changes to the rebate program are fair and equitable and not 
unreasonably discriminatory because they apply equally to all Priority 
Customer orders. All similarly situated Priority Customer orders are 
subject to the same rebate schedule, and access to the Exchange is 
offered on terms that are not unfairly discriminatory. Furthermore, the 
proposed increase in credits for executing higher percentages of total 
national customer volume is equitable and not unfairly discriminatory 
because the proposed rates and changes encourage Members to direct 
increased amounts of Priority Customer contracts to the Exchange. 
Market participants want to trade with Priority Customer order flow. To 
the extent Priority Customer order flow is increased by the proposal, 
market participants will increasingly compete for the opportunity to 
trade on the Exchange including sending more orders and providing 
narrower and larger sized quotations in the effort to trade with such 
Priority Customer order flow. The resulting increased volume and 
liquidity will benefit all Exchange participants by providing more 
trading opportunities and tighter spreads.

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 believes that the 
proposed change would increase both intermarket and intramarket 
competition by encouraging Members to direct their Priority Customer 
orders to the Exchange, which should enhance the quality of quoting and 
increase the volume of contracts traded on MIAX. Respecting the 
competitive position of non-Priority Customers, the Exchange believes 
that this rebate program should provide additional liquidity that 
enhances the quality of its markets and increases the number of trading 
opportunities on MIAX for all participants, including non-Priority 
Customers, who will be able to compete for such opportunities. This 
should 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 and rebates 
to remain competitive with other exchanges and to attract order flow to 
the Exchange. The Exchange believes that the proposed rule change 
reflects this competitive environment because it increases rebates and 
thus encourages market participants to direct their customer order 
flow, to provide liquidity, and to attract additional transaction 
volume to the Exchange. Given the robust competition for volume among 
options markets, many of which offer the same products, enhancing the 
existing volume based customer rebate program to attract order flow is 
consistent with the goals of the Act. The Exchange believes that the 
proposal will enhance competition, because market participants will 
have another additional pricing consideration in determining where to 
execute orders and post liquidity if they factor the benefits of the 
proposed rebate program into the determination.

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.\16\ 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.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2015-51 on the subject line.

[[Page 48385]]

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2015-51. 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 available publicly. All 
submissions should refer to File Number SR-MIAX-2015-51, and should be 
submitted on or before September 2, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19761 Filed 8-11-15; 8:45 am]
 BILLING CODE 8011-01-P