[Federal Register Volume 80, Number 237 (Thursday, December 10, 2015)]
[Notices]
[Pages 76716-76719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31065]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76557; File No. SR-MIAX-2015-65]


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

December 4, 2015.
    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 November 30, 2015, 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 ``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 modify the 
monthly volume thresholds in Tiers 2 and 3 in the Priority Customer 
Rebate Program (the ``Program'').\3\
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    \3\ See Securities Exchange Act Release Nos. 76098 (October 7, 
2015), 80 FR 61866 (October 14, 2015) (SR-MIAX-2015-58); 75856 
(September 8, 2015), 80 FR 55158 (September 14, 2015) (SR-MIAX-2015-
53); 75631 (August 6, 2015), 80 FR 48382 (August 12, 2015) (SR-MIAX-
2015-51); 74758 (April 17, 2015), 80 FR 22756 (April 23, 2015) (SR-
MIAX-2015-27); 74007 (January 9, 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).
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Priority Customer Rebate Program
    Currently, the Exchange credits each Member the per contract amount 
resulting from each Priority Customer \4\ 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

[[Page 76717]]

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 will be delivered to the Member 
Firm that submits the order to the Exchange.
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    \4\ 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 order in listed options per day on average during a 
calendar month for its own beneficial account(s). See Exchange Rule 
100.
    \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 Release Nos. 75631 (August 6, 2015), 
80 FR 48382 (August 12, 2015) (SR-MIAX-2015-51), 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 Release Nos. 75408 (July 9, 2015) 
80 Fr 41530 (July 15, 2015) (SR-MIAX-2015-45); 72943 (August 28, 
2014), 79 FR 52785 (September 4, 2014) (SR-MIAX-2014-45).
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    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 above 
1.75% of the national customer volume in multiply-listed options during 
a particular calendar month, such Member will currently receive a 
credit of $0.21 for each Priority Customer contract (other than Select 
Symbols) executed during that month, even though there are lower 
incremental percentages for lower volume tiers leading up to the 1.75% 
volume threshold.
    The current Priority Customer Rebate Program table designates the 
following monthly volume tiers and corresponding per contract credits:

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                                                                                                   Per contract
 Percentage thresholds of national customer volume in multiply-    Per contract    Per contract     credit for
        listed  options classes listed on MIAX  (monthly)             credit      credit in MIAX   prime agency
                                                                                  select symbols       order
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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......................................................            0.21            0.24            0.10
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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. Specifically, the new thresholds will be as set forth 
in the following table:




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                                                                                     Per contract
 Percentage thresholds of national customer volume   Per contract    Per contract     credit for
in multiply-listed  options classes listed on MIAX      credit      credit in MIAX   prime agency
                     (monthly)                                      select symbols       order
--------------------------------------------------------------------------------------------------
0.00-0.50%........................................           $0.00           $0.00           $0.10
Above 0.50-1.20...................................            0.10            0.10            0.10
Above 1.20-1.75...................................            0.15            0.20            0.10
Above 1.75........................................            0.21            0.24            0.10
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    The Exchange believes that the proposed new monthly volume tiers 
should provide incentives for Members to direct greater Priority 
Customer trade volume to the Exchange.
MIAX Select Symbols
    The proposed new monthly volume thresholds will apply to multiply 
listed options classes, including MIAX Select Symbols.\11\ The Tier 2 
per contract credit volume threshold will now extend from above 0.50% 
to 1.20%. The effect of this is that Members must still execute [sic] 
0.50% of the national customer volume in a particular class in order to 
qualify for the Tier 2 per contract credit, and must now exceed 1.20% 
of the national customer volume in the affected class in order to 
receive the Tier 3 per contract credit. The Tier 3 volume threshold 
will now extend from above 1.20% to 1.75%. The Tier 4 volume threshold 
of above 1.75% will be unchanged.
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    \11\ 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.
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    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 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

[[Page 76718]]

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.\12\ The Exchange calculates volume 
thresholds on a monthly basis. The proposed changes to the Fee Schedule 
will be operative as of December 1, 2015.
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    \12\ 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.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \13\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \14\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 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 Program and the proposed new tier 
structure should improve market quality for all market participants. 
The proposed changes to the 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. 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 
result in any burden on competition that is 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 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,\15\ and Rule 19b-4(f)(2) \16\ thereunder. 
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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
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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-2015-65 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-2015-65. 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

[[Page 76719]]

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-2015-65 and should be 
submitted on or before December 31, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31065 Filed 12-9-15; 8:45 am]
 BILLING CODE 8011-01-P