[Federal Register Volume 81, Number 209 (Friday, October 28, 2016)]
[Notices]
[Pages 75171-75174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26054]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79146; File No. SR-MIAX-2016-36]


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

October 24, 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 October 14, 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 and II 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to reflect the 
addition of

[[Page 75172]]

new features to a number of existing interfaces and data feeds, and one 
new market data feed, as described below, to support the trading of 
complex orders on the Exchange. The Exchange is not proposing to adopt 
any new fees at this time and is simply proposing to state in the Fee 
Schedule that the interfaces and data feeds listed below will support 
the trading of complex orders on MIAX initially at no additional 
charge.
Background
    The Exchange recently adopted new rules governing the trading in, 
and detailing the functionality of the MIAX System \3\ in the handling 
of, complex orders on the Exchange.\4\ In order to support the trading 
of complex orders on the Exchange, the Exchange is proposing to expand 
several current interfaces and data feeds (for which a fee is presently 
charged) to include complex orders in the current interfaces and data 
feeds and in the proposed new data feed. The Exchange is not proposing 
to adopt new fees, and instead is proposing to enhance the current 
interfaces and data feeds, and to introduce a new data feed, cToM 
(described below) to support the trading of complex orders on the 
Exchange.
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    \3\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \4\ See Securities Exchange Act Release No. 79072 (October 7, 
2016), 81 FR 71131 (October 14, 2016) (SR-MIAX-2016-26) (Order 
Approving a Proposed Rule Change to Adopt New Rules to Govern the 
Trading of Complex Orders).
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Interfaces
    The Exchange is proposing to include complex orders in its current 
interfaces to the System that enable Members to connect with the System 
for various uses. Specifically, the Exchange is proposing to enhance 
the MIAX Financial Information Exchange (``FIX'') Port, the MIAX 
Express Interface (``MEI'') Port, the MIAX Clearing Trade Drop 
(``CTD'') Port, and the MIAX FIX Trade Drop (``FXD'') Port (each 
described below) to support the trading of complex orders on MIAX. The 
Exchange is proposing to reflect this enhancement by adding new 
language to the Fee Schedule describing the application of these 
interfaces to complex orders.
FIX Port
    The Financial Information Exchange (``FIX'') Port \5\ allows 
Members to electronically send orders in all products traded on the 
Exchange. Section 5(d)(i) of the Fee Schedule currently provides that 
MIAX will assess monthly FIX Port Fees on Members in each month the 
Member is credentialed to use a FIX Port in the production environment 
and based upon the number of credentialed FIX Ports. The Exchange is 
proposing to amend Section 5(d)(i) of the Fee Schedule to state clearly 
in footnote 25 that a FIX Port is an interface with MIAX systems that 
enables the Port user (typically an Electronic Exchange Member 
(``EEM'') \6\ or a Market Maker) to submit simple and complex orders 
electronically to MIAX.
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    \5\ A FIX Port is an interface with MIAX systems that enables 
the Port user (typically an EEM or a Market Maker) to submit orders 
electronically to MIAX.
    \6\ The term ``Electronic Exchange Member'' means the holder of 
a Trading Permit who is not a Market Maker. Electronic Exchange 
Members are deemed ``members'' under the Act. See Exchange Rule 100.
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MEI Port
    The MIAX Express Interface (``MEI'') \7\ Port, allows Market Makers 
to submit electronic quotes to the Exchange. Section 5(d)(ii) of the 
Fee Schedule provides that MIAX will assess monthly MEI Port Fees on 
Market Makers in each month the Member has been credentialed to use the 
MEI Port in the production environment and has been assigned to quote 
in at least one class. The amount of the monthly MEI Port Fee is based 
upon the number of classes in which the Market Maker was assigned to 
quote on any given day within the calendar month, and upon various 
levels of class volume percentages. In addition to its current 
features, the MEI Port will now include the identification of the 
complex strategies currently trading on MIAX. The Exchange is proposing 
to amend Section 5(d)(ii) of the Fee Schedule to state clearly in 
footnotes 27, 28 and 29 that MIAX Express Interface is a connection to 
MIAX systems that enables Market Makers to submit simple and complex 
electronic quotes to MIAX; that Full Service MEI Ports provide Market 
Makers with the ability to send Market Maker simple and complex quotes, 
eQuotes, and quote purge messages to the MIAX System; and that Limited 
Service MEI Ports provide Market Makers with the ability to send simple 
and complex eQuotes and quote purge messages only, but not Market Maker 
Quotes, to the MIAX System.
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    \7\ MIAX Express Interface is a connection to MIAX systems that 
enables Market Makers to submit electronic quotes to MIAX.
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CTD Port
    The Clearing Trade Drop (``CTD'') provides Exchange members with 
real-time clearing trade updates. The updates include the Member's 
clearing trade messages on a low latency, real-time basis. The trade 
messages are routed to a Member's connection containing certain 
information. The information includes, among other things, the 
following: (i) Trade date and time; (ii) symbol information; (iii) 
trade price/size information; (iv) Member type (for example, and 
without limitation, Market Maker, EEM, Broker-Dealer); and (v) Exchange 
Member Participant Identifier (``MPID'') for each side of the 
transaction, including Clearing Member MPID. CTD Port Fees are assessed 
in any month the Member is credentialed to use the CTD Port in the 
production environment. The Exchange is proposing to state clearly in 
Section 5(d)(iii) of the Fee Schedule that the CTD Port users will 
receive strategy specific information for complex transactions.
FXD Port
    The FIX Drop Copy Port (``FXD'') is a messaging interface that 
provides a copy of real-time trade execution, trade correction and 
trade cancellation information to FIX Drop Copy Port users who 
subscribe to the service. FIX Drop Copy Port users are those users who 
are designated by an EEM to receive the information and the information 
is restricted for use by the EEM only. FXD Port Fees are assessed in 
any month the Member is credentialed to use the FXD Port in the 
production environment. The Exchange is proposing to state clearly in 
Section 5(d)(iv) of the Fee Schedule that the FXD is a messaging 
interface that will provide a copy of real-time trade execution, trade 
correction and trade cancellation information for simple and complex 
orders to FIX Drop Copy Port users who subscribe to the service. FXD 
Port users will receive a copy of real-time trade execution, trade 
correction and cancellation information for transactions in simple and 
complex orders on MIAX.
Market Data Feeds
    The Exchange is also proposing to expand the scope of certain 
market data products to include data relating to complex orders traded 
on the Exchange at no additional cost to subscribers. Specifically, the 
Exchange is proposing to expand the MIAX Top of Market (``ToM'') feed, 
the MIAX Order Feed (``MOR''), and the Administrative Information 
Subscriber (``AIS'') data feeds, as described below, to include data 
for complex orders traded on MIAX.
MIAX ToM and cToM
    MIAX Top of Market (``ToM'') is a market data product that provides 
a

[[Page 75173]]

direct data feed that includes the Exchange's best bid and offer, with 
aggregate size, based on displayable order and quoting interest on the 
Exchange. The ToM data feed includes data that is identical to the data 
sent to the processor for the Options Price Reporting Authority 
(``OPRA'').
    The Exchange is proposing to provide complex order market data in a 
similar fashion by way of a new market data product known as MIAX 
Complex Top of Market (``cToM''). The cToM data feed is a separate new 
product that is complex order specific and is available to those who 
wish to subscribe to it. cToM will provide subscribers with the same 
information as the ToM market data product as it relates to the 
Strategy Book, i.e., the Exchange's best bid and offer for a complex 
strategy, known as the ``cMBBO,'' with aggregate size, based on 
displayable order and quoting interest in the complex strategy on the 
Exchange.\8\
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    \8\ For a complete description of ToM, see Securities Exchange 
Act Release No. 69007 (February 28, 2013), 78 FR 14617 (March 6, 
2013) (SR-MIAX-2013-05).
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    cToM will also contain a feature (``feature'') that provides the 
number of Priority Customer \9\ contracts that are included in the size 
associated with the Exchange's best bid and offer. This feature will be 
implemented on a date determined by the Exchange and communicated to 
membership via Regulatory Circular. The Exchange will announce the 
implementation date of the feature no later than 90 days after the 
publication of the Commission Order (``Order'') approving the trading 
of complex orders on MIAX in the Federal Register.\10\ The 
implementation date will be no later than 90 days following publication 
of the Regulatory Circular announcing publication of the approval Order 
in the Federal Register.
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    \9\ 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 account(s). See Exchange Rule 
100.
    \10\ See supra note 4.
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    In addition, cToM will provide subscribers with the identification 
of the complex strategies currently trading on MIAX; complex strategy 
last sale information; and the status of securities underlying the 
complex strategy (e.g., halted, open, or resumed). As stated above, 
cToM is distinct from ToM, and anyone wishing to receive cToM data must 
subscribe to cToM regardless of whether they are a current ToM 
subscriber. ToM subscribers are not required to subscribe to cToM, and 
cToM subscribers are not required to subscribe to ToM. The cToM feed 
will be available initially at no cost, as reflected in the proposed 
changes to the table in Section 6(a) of the Fee Schedule.
AIS
    The Exchange will include certain administrative information 
concerning complex orders to Administrative Information Subscribers 
(``AIS''). The AIS market data feed includes opening imbalance 
condition information; opening routing information; Expanded Quote 
Range information, as provided in MIAX Rule 503(f)(5); Post-Halt 
Notification, as provided in MIAX Rule 504(d); and Liquidity Refresh 
condition information, as provided in MIAX Rule 515(c)(2) 
(collectively, the ``administrative information''). An AIS is a market 
participant that connects with the MIAX System for purposes of 
receiving the administrative information. Thus, an AIS that elects not 
to receive the top of market data through a subscription to cToM or act 
as a MIAX Market Maker will be able to receive the administrative 
information via connectivity to the MIAX System through an AIS 
Port.\11\ The Exchange proposes to enhance AIS to include information 
concerning the commencement of a Complex Auction under the complex 
order rules.\12\ The addition of complex order information to the AIS 
data feed is a value-added feature of AIS, and the Exchange proposes to 
state clearly in Section 6(b) of the Fee Schedule that the AIS market 
data feed will include administrative information for simple and 
complex orders. The fee for the AIS market data feed is currently 
waived for distributors that also subscribe to ToM. The Exchange 
proposes to amend Section 6(b) of the Fee Schedule to provide that the 
AIS market data feed is also waived if the distributor subscribes to 
cToM.
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    \11\ An AIS Port provides an AIS with the connectivity necessary 
to receive administrative information from the MIAX System. See 
Securities Exchange Act Release No. 73326 (October 9, 2014), 79 FR 
62233 (October 16, 2014) (SR-MIAX-2014-51).
    \12\ See supra note 4.
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MOR
    The Exchange proposes to include complex order information as an 
enhanced feature of the MIAX Order Feed (``MOR'') data product. MOR is 
a real-time full order book data feed that provides information for 
orders on the MIAX Book. MOR will now also include the same information 
regarding complex orders on the Strategy Book. MOR will provide real-
time information to enable users to keep track of the Strategy Book for 
all complex strategies traded on MIAX. Specifically, MOR will now 
include information concerning the identification of complex orders on 
the Strategy Book (as described in the proposal to establish rules for 
the trading of complex orders on the Exchange).\13\ MOR will provide 
real-time data including the limit price, origin, and size of each 
order for the entire Strategy Book to its users and the Exchange 
proposes to state clearly in Section 6(c) of the Fee Schedule that the 
AIS market data feed will include administrative information for simple 
and complex orders.
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    \13\ See supra note 4.
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2. Statutory Basis
    MIAX believes that its proposed rule change is consistent with 
Section 6(b) of the Act \14\ in general, and furthers the objectives of 
Section 6(b)(4) \15\ of the Act, in that it is designed to provide for 
an equitable allocation of reasonable dues, fees and other charges 
among Exchange Members and other persons using its facilities, because 
it applies equally to all Members and any persons using the facilities 
or services of the Exchange.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4).
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    In addition, the Exchange believes the proposed rule change also 
furthers the objectives of Section 6(b)(5) \16\ of the Act in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanisms of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest, and it is not designed to permit unfair discrimination 
among customers, brokers, or dealers.
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    \16\ 15 U.S.C. 78f(b)(5).
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    The proposed addition of complex order information to the various 
enumerated ports and market data products are [sic] designed to promote 
just and equitable principles of trade by providing MIAX participants 
with trading information and market data that should enable them to 
make informed decisions concerning complex orders on the MIAX Exchange 
by using the data provided by MIAX to assess market conditions that 
directly affect such decisions. The proposal to include the value-added 
feature of complex order information to existing ports and data 
products removes impediments to, and is designed to further perfect, 
the mechanisms of a free and open market

[[Page 75174]]

and a national market system by making the MIAX market, more 
transparent and accessible to market participants as MIAX begins to 
trade complex orders.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. On the contrary, the 
Exchange believes that the addition of information concerning complex 
orders to the various ports and market data products will enhance 
inter-market competition by supplementing existing ports and data 
products with information concerning complex orders traded on MIAX. 
This transparency and access should enable MIAX to compete with other 
exchanges for order flow in complex orders in the options markets.
    Additionally, respecting intra-market competition, the value-added 
features relating to complex orders in the various ports and data 
products are available to all subscribers at no additional cost, thus 
providing all subscribers to the ports and data products with an even 
playing field with respect to information and access to trade complex 
orders on MIAX.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days from the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission may designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has asked the 
Commission to waive the 30-day operative delay. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest. Such waiver will allow 
the Exchange to offer the features relating to the trading of complex 
orders that will be embedded in the Exchange's enumerated ports and 
market data products on the date that coincides with the projected 
October 24, 2016 launch of the trading of complex orders on the 
Exchange.\20\ Accordingly, the Commission hereby waives the 30-day 
operative delay requirement and designates the proposed rule change as 
operative upon filing with the Commission.
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    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.

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-2016-36 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-2016-36. 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-2016-36, and should be 
submitted on or before November 18, 2016.
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    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-26054 Filed 10-27-16; 8:45 am]
 BILLING CODE 8011-01-P