[Federal Register Volume 81, Number 189 (Thursday, September 29, 2016)]
[Notices]
[Pages 67016-67019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23497]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78919; File No. SR-MIAX-2016-32]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend Its Fee Schedule To Modify the Exchange's 
Connectivity Fees

September 23, 2016.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act

[[Page 67017]]

of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on September 12, 2016, 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.
---------------------------------------------------------------------------

    \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'') to modify the Exchange's connectivity 
fees.
    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 regarding 
connectivity to the Exchange. Specifically, the Exchange proposes to 
amend Section 4 of the Fee Schedule, Testing and Certification Fees, to 
state that Member and Non-Member Network Connectivity Testing and 
Certification Fees will not be assessed for testing and certification 
of connectivity to the Exchange's disaster recovery systems (for 
purposes of the Fee Schedule, the ``Disaster Recovery Facility'').\3\ 
The Exchange also proposes to amend Section 5 of the Fee Schedule, 
System Connectivity Fees, to establish a new connectivity fee for 1 
Gigabit (``Gb'') and 10 Gb fiber connections to the Exchange's Disaster 
Recovery Facility.
---------------------------------------------------------------------------

    \3\ See Exchange Rule 321. See also, Securities Exchange Act 
Release No. 76303 (October 29, 2015), 80 FR 68373 (November 4, 2015) 
(SR-MIAX-2015-61).
---------------------------------------------------------------------------

Testing and Certification Fees
    The Exchange currently offers various bandwidth alternatives for 
connectivity to the Exchange's System,\4\ including a 10 Gb fiber 
connection, a 1 Gb fiber connection and a 10 Gb ultra-low latency 
(``ULL'') fiber connection. The Exchange currently assesses a Member 
Network Connectivity Testing and Certification Fee of $1,000 for each 1 
Gb connection, and $4,000 for each 10 Gb or 10 Gb ULL connection.\5\ 
Non-Members are assessed a Non-Member Network Connectivity Testing and 
Certification Fee of $1,200 for each 1 Gb connection, and $4,200 for 
each 10 Gb or 10 Gb ULL connection.\6\ The Exchange proposes to amend 
Sections 4(c) and 4(d) of the Fee Schedule to state that these Member 
and Non-Member Network Connectivity Testing and Certification Fees will 
not be assessed for testing and certification of connectivity to the 
Exchange's Disaster Recovery Facility.
---------------------------------------------------------------------------

    \4\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \5\ See Fee Schedule Section 4(c).
    \6\ See Fee Schedule Section 4(d).
---------------------------------------------------------------------------

    The purpose of the Exchange's proposal not to charge Member and 
Non-Member network connectivity testing and certification fees for 
testing required in order to connect to the Disaster Recovery Facility 
is to eliminate any potential impediment to Members and Non-Members in 
testing and certifying for connectivity to the Disaster Recovery 
Facility, and to encourage Members and Non-Members to set up the 
connections to such Facility for disaster recovery purposes.
System Connectivity Fees
    The Exchange currently assesses Monthly Member Network Connectivity 
fees for the applicable connectivity in any month when a Member or Non-
Member is credentialed to use any of the MIAX APIs or Market Data feeds 
in the production environment.
    The Exchange proposes to amend the table in Section 5 of the Fee 
Schedule to explicitly reflect the monthly Member and Non-Member 
Network connectivity fees as they apply to the Exchange's primary and 
secondary facilities, and to the Exchange's Disaster Recovery Facility. 
Under the proposal, fees for connectivity to the Exchange's primary and 
secondary (i.e., backup) facilities will remain unchanged. The Exchange 
is proposing to amend the table in Section 5 to reflect the current per 
connection fees for connectivity with the primary and secondary 
facilities by labelling the heading of the columns reflecting such fees 
as ``Primary/Secondary Facility'' for a 1 Gb, 10 Gb and 10 Gb ULL 
connection, respectively.
    The Exchange is proposing to add new columns to the table in 
Section 5 with the heading ``Disaster Recovery Facility'' to set forth 
the monthly per connection fees for a 1 Gb and 10 Gb connection to the 
Disaster Recovery Facility. Specifically, the Exchange proposes a 
monthly per connection Network Connectivity Fee of $500 for each 1 Gb 
connection to the Disaster Recovery Facility and a monthly per 
connection Network Connectivity Fee of $2,500 for each 10 Gb connection 
to the Disaster Recovery Facility for both Members and Non-Members. The 
Exchange does not propose to offer a 10 Gb ULL connection to the 
Disaster Recovery Facility at this time; the 10 Gb ULL fees will 
therefore remain unchanged. The Exchange proposes to amend the tables 
in Sections 5(a) and (b) to reflect this.
    The Exchange believes that the proposed pricing for connectivity to 
the Disaster Recovery Facility is reflective of the value it will 
provide to users of the Exchange. The Exchange further believes that 
the assessment of connectivity fees to the Disaster Recovery Facility 
will assist the Exchange in recouping some of the costs to the Exchange 
associated with developing and maintaining this facility for disaster 
recovery use. Not charging users a testing and certification fee for 
testing required in order to connect to the Disaster Recovery Facility 
should encourage Members and Non-Members to connect to such facility. 
The Exchange notes that other exchanges charge fees for connection to 
their Disaster Recovery facilities by their market participants.\7\
---------------------------------------------------------------------------

    \7\ See Chicago Board Options Exchange, Incorporated (``CBOE'') 
Fees Schedule, p. 13; see also NASDAQ PHLX LLC (``Phlx'') Pricing 
Schedule, Section XI [sic].
---------------------------------------------------------------------------

    The Exchange proposes to implement the proposed changes to the Fee 
Schedule effective as of September 16, 2016.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is

[[Page 67018]]

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 provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which the Exchange operates or controls. The 
Exchange also believes the proposal furthers the objectives of Section 
6(b)(5) of the Act \10\ in that it is designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general to protect investors and the public interest and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers and dealers.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that its proposal is consistent with Section 
6(b)(4) of the Act because the fees assessed for the connectivity to 
the Disaster Recovery Facility will allow the Exchange to cover certain 
of the costs associated with maintaining these Facility for disaster 
recovery use by users of the Exchange. The Exchange believes that the 
proposal to establish fees for the Disaster Recovery Facility 
connectivity is fair, equitable and not unreasonably discriminatory 
because the fees are assessed equally among all users according to the 
bandwidth that such user determines is the best suited for its 
purposes, i.e., either 1 Gb or 10 Gb, and how many connections such 
Users require.
    The Exchange believes that the Exchange's decision not to charge 
Member and Non-Member network connectivity testing and certification 
fees for testing required in order to connect to the Disaster Recovery 
Facility is consistent with Section 6(b)(4) of the Act because it will 
encourage Members and Non-Members to set up the connections to such 
Facility for disaster recovery purposes. Therefore, the Exchange 
believes that it is reasonable not to charge Members and Non-Members 
for testing and certification in relation to connecting to the Disaster 
Recovery Facility.
    The Exchange also believes the proposed Disaster Recovery Facility 
connectivity fees are equitably allocated in that all Members and Non-
Members will be charged the same amount to cover the connection costs 
depending on the speed of the connection as well as the number of 
connections selected by such user. All Members and Non-Members may 
subscribe to this connectivity to the Disaster Recovery Facility, and 
the Exchange is not eliminating any existing connectivity.
    The Exchange also believes that its proposal is consistent with the 
objectives of Section 6(b)(5) of the Act \11\ because the Disaster 
Recovery Facility connectivity will be beneficial to all MIAX 
participants. The Exchange anticipates that providing the opportunity 
to connect to the Disaster Recovery Facility to all users of the 
Exchange will further enhance the Exchange's support of risk management 
in the form of disaster recovery on behalf of its Member and Non-Member 
users.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange also believes that providing connectivity testing and 
certification at no cost for the Disaster Recovery Facility is 
consistent with Section 6(b)(5) of the Act because it is being offered 
to all MIAX participants at no cost. There is no differentiation among 
MIAX participants with regard to the testing and certification required 
to receive the disaster recovery services through the Disaster Recovery 
Facility.

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. On the contrary, 
the Exchange believes that the proposed changes should increase both 
intermarket and intramarket competition. Specifically, the Exchange 
believes that the changes will promote competition by offering MIAX 
participants more flexibility in their choice of disaster recovery 
services, which will in turn enhance their trading operations and 
ultimately bring greater efficiency to trading in the marketplace.
    As to inter-market competition, 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. The 
Exchange believes that the proposed changes reflect this competitive 
environment and may result in enhanced services to a market 
participant. Given the robust competition among options markets for the 
services that they each offer to market participants, expanding and 
thereby enhancing the services available on MIAX is consistent with the 
goals of the Act.

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,\12\ and Rule 19b-4(f)(2) \13\ 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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-2016-32 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-2016-32. 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 67019]]

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-2016-32 and should be 
submitted on or before October 20, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-23497 Filed 9-28-16; 8:45 am]
 BILLING CODE 8011-01-P