[Federal Register Volume 80, Number 248 (Monday, December 28, 2015)]
[Notices]
[Pages 80849-80851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32526]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76717; File No. SR-MIAX-2015-73]


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 21, 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 December 14, 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 the Fee Schedule to modify the 
transaction fees for Members that participate in the price improvement 
auction (``PRIME Auction'' or ``PRIME'') pursuant to Rule 515A.\3\ 
Specifically, the Exchange proposes to: (i) Increase the fee for a 
PRIME AOC Response \4\ from $0.49 per

[[Page 80850]]

contract to $0.50 per contract for standard options in Penny Pilot 
classes; (ii) increase the fee for a PRIME AOC Response from $0.94 per 
contract to $0.99 per contract for standard options in non-Penny Pilot 
classes; and (iii) continue to provide for additional incentives of 
$0.04 per contract for achieving certain Priority Customer Rebate 
Program volume tiers. The Exchange also proposes technical clarifying 
amendments to the Fee Schedule, as described below.
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    \3\ See Exchange Rule 515A. See also Securities Exchange Act 
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); MIAX Options Fee Schedule, Section 
(1)(a)(iv).
    \4\ See Exchange Rule 515A(a)(2)(i). When the Exchange receives 
a properly designated Agency Order for auction processing, a Request 
for Responses (``RFR'') detailing the option, side, size, and 
initiating price will be sent to all subscribers of the Exchange's 
data feeds. Members may submit RFR responses consisting of an 
Auction or Cancel (``AOC'') order or an AOC eQuote. Such responses 
cannot cross the disseminated MIAX Best Bid or Offer (``MBBO'') on 
the opposite side of the market from the response.
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    Currently, the Exchange assesses PRIME AOC Responses $0.49 per 
contract for standard options in Penny Pilot classes and $0.94 per 
contract in non-Penny Pilot classes. The Exchange now proposes to 
modify these fees that apply to PRIME AOC Responses. Specifically, the 
Exchange proposes to: (i) Increase the fee for a PRIME AOC Response 
from $0.49 per contract to $0.50 per contract for standard options in 
Penny Pilot classes; and (ii) increase the fee for a PRIME AOC Response 
from $0.94 per contract to $0.99 per contract for standard options in 
non-Penny Pilot classes. The Exchange will continue to assess the 
standard transaction fees to a PRIME AOC Response if they execute 
against unrelated orders.
    The Exchange currently offers Members that submit PRIME AOC 
Responses the opportunity to reduce transaction fees by $0.04 per 
contract in standard options if the Member or its affiliates of at 
least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A, qualifies in a given month for Priority 
Customer Rebate Program volume tiers 3 or 4 in the Fee Schedule.
    Currently, 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 or 4 are assessed a PRIME AOC Response fee of $0.45 per 
contract for standard options in Penny Pilot classes. In addition, 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 or 4 are assessed a 
PRIME AOC Response fee of $0.90 per contract for standard options in 
non-Penny Pilot classes.
    In order to continue to offer Members or their 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 or 4 (``qualifying Members'') the opportunity to 
reduce transaction fees by $0.04 per contract in standard options, the 
Exchange is proposing to modify the reduced fees to $0.46 per contract 
for standard options in Penny Pilot classes, and to $.0.95 per contract 
for standard options in non-Penny Pilot classes for such qualifying 
Members.
    The Exchange believes that these incentives will continue to 
encourage Members to transact a greater number of contracts on the 
Exchange. The Exchange notes that these incentives will operate 
identically to the Priority Customer Rebate Program incentives that 
apply to 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 or 4 in 
other types of transaction fees.\5\
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    \5\ See MIAX Options Fee Schedule.
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    The Exchange is also proposing technical clarifying amendments to 
the Fee Schedule. Specifically, the headings in the table in Section 1) 
a) iv) of the Fee Schedule will be amended from: (i) ``PRIME Order'' to 
``PRIME Order Fee,'' (ii) ``Responder to PRIME Auction'' to ``Responder 
to PRIME Auction Fee,'' and (iii) ``PRIME Break-up'' to ``PRIME Break-
up Credit.'' These changes are intended to clarify and more 
specifically label the various columns in the table for investors using 
it.
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 and issuers and other persons using its 
facilities.
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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's proposal to increase the transaction fees for 
certain participants that submit PRIME AOC Responses is reasonable 
because the Exchange's fees will remain competitive with fees at other 
options exchanges.\8\ The Exchange's proposal to increase the 
transaction fees for certain participants in the PRIME Auction is 
equitable and not unfairly discriminatory because the increase applies 
equally to all such participants. The Exchange believes that the 
transaction fees for PRIME AOC Responses will not deter market 
participants from providing price improvement.
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    \8\ See e.g., NYSE Amex Options Fee Schedule; International 
Securities Exchange LLC Schedule of Fees; BOX Options Exchange Fee 
Schedule.
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    The Exchange's proposal to offer qualifying PRIME Auction 
participants the opportunity to reduce transaction fees by $0.04 per 
contract in standard options, 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 qualifying PRIME Auction participants the 
opportunity to reduce transaction fees by $0.04 per contract in 
standard options, provided certain criteria are met, is equitable and 
not unfairly discriminatory because the Exchange will offer all market 
participants a means to reduce transaction fees by qualifying for 
volume tiers in the Priority Customer Rebate Program. The Exchange 
believes that continuing to offer all such market participants the 
opportunity to lower transaction fees by transacting Priority Customer 
order flow in turn benefits all market participants. To the extent that 
there are higher transaction fees assessed on market participants 
without Priority Customer order flow, the Exchange believes that this 
is appropriate because the proposal creates incentives for 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 on MIAX. 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 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. The Exchange believes that all such 
market participants should have the opportunity to lower transaction 
fees by transacting additional Priority Customer order flow, which in 
turn benefits all market participants.
    The Exchange believes that the technical clarifying amendments to 
the

[[Page 80851]]

Fee Schedule ensure that the Fee Schedule is transparent regarding the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and issuers and other persons using its facilities, and are 
thus consistent with the Act.

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 will enhance the competiveness of the 
Exchange relative to other exchanges that offer their own electronic 
price improvement mechanism.
    The Exchange believes that the proposed fees do not impact intra-
market competition notwithstanding that the proposed per contract fees 
assessed to participants in the PRIME Auction that respond to an Agency 
Order (for purposes of this discussion, ``responders'') are greater 
than the per contract fees assessed to participants that begin the 
auction process by submitting an Agency Order (for purposes of this 
discussion, ``initiators''). Initiators guarantee execution of the 
entire Agency Order in full, either at a single price or at multiple 
prices using the ``auto-match'' option.\9\ Responders may elect not to 
respond at all, or may elect to respond only at a single price, and are 
not required to guarantee the execution of the entire order at any 
price. Because of this guarantee, initiators are assuming greater risk 
and are providing more liquidity in the Exchange's markets. The 
Exchange believes therefore that it is reasonable, equitable and not 
unfairly discriminatory, and consequently not a burden on competition, 
to charge responders and initiators differently, as proposed. The 
Exchange believes that these market participants understand that the 
price-improving benefits, based on their experience with PRIME, and on 
electronic price improvement mechanisms on other markets, justify the 
transaction fees associated with the PRIME Auction, based upon the 
disparity in risk assumed in the PRIME Auction process.
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    \9\ See Exchange Rule 515A(a)(2)(i)(A).
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    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 to the 
Exchange. The Exchange believes that the proposed rule change reflects 
this competitive environment because it establishes a fee structure in 
a manner that encourages market participants to submit their order 
flow, to provide liquidity, and to attract additional transaction 
volume 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,\10\ and Rule 19b-4(f)(2) \11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 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-2015-73 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-MIAX-2015-73. 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 Section, 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 will also 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-2015-73 and should be 
submitted on or before January 19, 2016.

    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. 2015-32526 Filed 12-24-15; 8:45 am]
 BILLING CODE 8011-01-P