[Federal Register Volume 81, Number 191 (Monday, October 3, 2016)]
[Notices]
[Pages 68084-68086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23751]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78950; File No. SR-MIAX-2016-33]


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

September 27, 2016.
    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 September 15, 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.
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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''). While changes to the Fee Schedule 
pursuant to this proposal are effective upon filing, the Exchange has 
designated these changes to be operative on October 1, 2016.
    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 MIAX Options Fee Schedule (the 
``Fee Schedule'') to offer two (2) additional Limited Service MIAX 
Express Interface (``MEI'') Ports to Market Makers.
    Currently, MIAX assesses monthly MEI Port Fees on Market Makers 
based upon the number of MIAX matching engines \3\ used by the Market 
Maker. Market Makers are allocated two (2) Full Service MEI Ports \4\ 
and two (2) Limited Service MEI Ports \5\ per matching engine to which 
they connect. The Exchange currently assesses the following MEI Port 
fees: (i) $5,000 for Market Maker Assignments in up to 5 option classes 
or up to 10% of option classes by volume; (ii) $10,000 for Market Maker 
Assignments in up to 10 option classes or up to 20% of option classes 
by volume; (iii) $14,000 for Market Maker Assignments in up to 40 
option classes or up to 35% of option classes by volume; (iv) $17,500 
for Market Maker Assignments in up to 100 option classes or up to 50% 
of option classes by volume; and (v) $20,500.00 for Market Maker 
Assignments in over 100 option classes or over 50% of option classes by 
volume up to all option classes listed on MIAX.\6\ In each of the 
foregoing categories, the stated fee applies if the less of the two 
applicable measurements is met. For example, a Market Maker that wishes 
to make markets in just one symbol would require the two (2) MEI Ports 
in a single matching engine; a Market Maker wishing to make markets in 
all symbols traded on MIAX would require the two (2) MEI Ports in each 
of the Exchange's matching engines. The Exchange also currently charges 
$50 per month for each additional Limited Service MEI Port per matching 
engine for Market Makers over and above the two (2) Limited Service MEI 
Ports per matching engine that are allocated with the Full Service MEI 
Ports. The Full Service MEI Ports, Limited Service MEI Ports, and the 
additional Limited Service MEI Ports all include access to MIAX's 
primary and secondary data centers and its disaster recovery center.
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    \3\ A ``matching engine'' is a part of the MIAX electronic 
system that processes options quotes and trades on a symbol-by-
symbol basis. Some matching engines will process option classes with 
multiple root symbols, and other matching engines will be dedicated 
to one single option root symbol (for example, options on SPY will 
be processed by one single matching engine that is dedicated only to 
SPY). A particular root symbol may only be assigned to a single 
designated matching engine. A particular root symbol may not be 
assigned to multiple matching engines.
    \4\ Full Service MEI Ports provide Market Makers with the 
ability to send Market Maker quotes, eQuotes, and quote purge 
messages to the MIAX System. Full Service MEI Ports are also capable 
of receiving administrative information. Market Makers are limited 
to two Full Service MEI Ports per matching engine.
    \5\ Limited Service MEI Ports provide Market Makers with the 
ability to send eQuotes and quote purge messages only, but not 
Market Maker Quotes, to the MIAX System. Limited Service MEI Ports 
are also capable of receiving administrative information. Market 
Makers initially receive two Limited Service MEI Ports per matching 
engine.
    \6\ See MIAX Fee Schedule, Section 5)d)ii).
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    The Exchange originally added the Limited Service MEI Ports to 
enhance the MEI Port connectivity made available to Market Makers, and 
subsequently made additional Limited Service MEI Ports available to 
Market Makers.\7\ Limited Service MEI Ports have been well received by 
Market Makers since their addition. The Exchange now proposes to offer 
to Market Makers the ability to purchase an additional two (2) Limited 
Service MEI Ports per matching engine over and

[[Page 68085]]

above the current two (2) additional Limited Service MEI Ports per 
matching engine that are available for purchase by Market Makers. The 
Exchange proposes to charge the same amount that it currently charges, 
$50 per month, for each extra Limited Service MEI Port per matching 
engine. The Exchange proposes making a corresponding change to footnote 
31 of the Exchange's Fee Schedule to specify that Market Makers will 
now be limited to purchasing four (4) additional Limited Service MEI 
Ports per matching engine, for a total of six (6) per matching engine. 
All other fees related to MEI Ports shall remain unchanged.
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    \7\ See Securities Exchange Act Release No. 70137 (August 8, 
2013), 78 FR 49586 (August 14, 2013) (SR-MIAX-2013-39); see also 
Exchange Act Release No. 70903 (November 20, 2013), 78 FR 228 
(November 26, 2013) (SR-MIAX-2013-52).
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    The purpose of this amendment to the Fee Schedule is to provide 
Market Makers with greater and improved technical flexibility to 
connect additional Limited Service MEI Ports to independent servers 
that host their eQuote and purge functionality. The Exchange believes 
that the offering of additional ports will help Market Makers mitigate 
the risk of using the same server for all of their Market Maker quoting 
activity. By using the additional Limited Service MEI Ports for risk 
purposes, Market Makers can place purge functionality on a different 
server than the Market Maker quoting server (via the Limited Service 
MEI Ports), which provides them a failsafe for getting out of the 
market in case they have an issue with the quote server. Market Makers 
can also use the extra Limited Service MEI Ports to submit eQuotes. 
Since eQuotes are frequently generated by a different algorithm that 
determines when to respond to an auction message, the Exchange believes 
that the offering of additional ports will further enable Market Makers 
to connect to a different server that processes auctions and eQuotes 
rather than forcing them to use their Market Maker Standard quote 
server as a gateway for communicating eQuotes to MIAX.
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 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal is consistent with Section 
6(b)(4) of the Act because only Market Makers that decide that they 
need the extra Limited Service MEI Ports will be charged the additional 
fee. The Exchange further believes that the availability of the 
additional Limited Service MEI Ports is equitable and not unfairly 
discriminatory because it further enhances Market Makers' access to the 
MIAX System and consequently enhances the marketplace by helping Market 
Makers to better manage risk, thus preserving the integrity of the MIAX 
markets, all to the benefit of and protection of investors and the 
public as a whole.
    The Exchange also believes that its proposal is consistent with the 
objectives of Section 6(b)(5) of the Act \11\ because the additional 
Limited Service MEI Ports are available to all Market Makers and the 
proposed fees assessable for the additional Limited Service MEI Ports 
apply equally to all Market Makers regardless of type, and access to 
the Exchange is offered on terms that are not unfairly discriminatory. 
The Exchange designed the fee rates in order to provide objective 
criteria for Market Makers of different sizes and business models to be 
assessed a MEI Port fee and to have technical connectivity that best 
matches their quoting activity on the Exchange and the offering of 
additional Limited Service MEI Ports comports with this objective.
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    \11\ 15 U.S.C. 78f(b)(5).
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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 proposal increases both intermarket and intramarket 
competition by enabling Market Makers to enhance their connectivity to 
the Exchange in a manner that is designed to provide Market Makers of 
different sizes and business models to be assessed a MEI Port fee and 
to have technical connectivity that best matches their quoting activity 
on the Exchange and the offering of additional Limited Service MEI 
Ports comports with this objective. The Exchange believes that the 
proposal will increase competition amongst Market Makers of different 
sizes and business models by encouraging Market Makers to connect 
additional Limited Service Ports to independent servers that host their 
eQuote and purge functionality and thereby increase such functionality. 
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 in order to attract market 
participants to use its services. The Exchange believes that the 
proposal reflects this competitive environment because it increases the 
Exchange's fees in a manner that continues to encourage market 
participants to register as Market Makers on the Exchange, to provide 
liquidity, and to attract order flow. To the extent that this purpose 
is achieved, all the Exchange's market participants should benefit from 
the improved market liquidity.

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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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.

[[Page 68086]]

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-2016-33 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-2016-33. 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 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-2016-33 and should be 
submitted on or before October 24, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-23751 Filed 9-30-16; 8:45 am]
 BILLING CODE 8011-01-P