[Federal Register Volume 84, Number 33 (Tuesday, February 19, 2019)]
[Notices]
[Pages 4864-4868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02606]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85109; File No. SR-MRX-2019-01]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Provisions for Excluding a Day From Its Volume Calculations
for Purposes of Determining Pricing Tiers
February 12, 2019.
Pursuant to 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 January 31, 2019, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
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 proposes to amend the Exchange's provisions for
excluding a day from its volume calculations for purposes of
determining pricing tiers.
The text of the proposed rule change is available on the Exchange's
website at http://nasdaqmrx.cchwallstreet.com/, at the principal office
of the Exchange, 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 purpose of the proposed rule change is to amend the Exchange's
provisions for excluding a day from its volume calculations for
purposes of determining pricing tiers. The Exchange is standardizing
its practice for removing a day from volume calculations in its Pricing
Schedule with its affiliated options market, Nasdaq PHLX LLC
(``Phlx'').\3\ Each change is discussed below.
---------------------------------------------------------------------------
\3\ See Phlx Pricing Schedule, Options 7, Section 1(b). The
Exchange's other affiliated options markets, Nasdaq ISE, Nasdaq
GEMX, Nasdaq BX, and The Nasdaq Options Market will also file
similar rule change proposals to conform to Phlx's rule.
---------------------------------------------------------------------------
Background
To avoid penalizing members when aberrant low volume days result
from systems or other issues at the Exchange, or where the Exchange
closes early for holiday observance, the Exchange currently has
language in its Pricing Schedule allowing it to exclude certain days
from its average daily volume (``ADV'') calculations. Currently,
language in the Exchange's Pricing Schedule provides that, for purposes
of determining ADV for certain incentive programs,\4\ any day that the
market is not open for the entire trading day or the Exchange instructs
members in writing to route their orders to other markets may be
excluded from such calculation; provided that the Exchange will only
remove the day for members that would have a lower ADV with the day
included. The proviso language (hereinafter, the ``better of rule'')
ensures that members would only have the day removed when doing so is
beneficial for the member. As such, the Exchange only applies the
better of rule to ADV calculations, and not for other volume-based
pricing where members would not benefit from having the day excluded
(e.g., straight volume accumulations).
---------------------------------------------------------------------------
\4\ The current language in the Pricing Schedule applies to the
calculations of Total Affiliated and/or Appointed Member ADV used to
determine tiered maker/taker fees for members. See Options 7,
Section 3, Table 3 (Qualifying Tier Thresholds).
---------------------------------------------------------------------------
Proposal
In Options 7, Section 1, the Exchange proposes to adopt subsection
(a) with the title ``Removal of Days for Purposes of Pricing Tiers,''
and renumber the existing first paragraph (related to fee disputes) as
subsection (b). The Exchange also proposes to adopt new language in
subsection (a) that is substantially similar to language currently in
place on Phlx.\5\ Specifically, as proposed:
---------------------------------------------------------------------------
\5\ See note 3 above.
---------------------------------------------------------------------------
(1)(A) Any day that the Exchange announces in advance that it will
not be open for trading will be excluded from the options tier
calculations set forth in its Pricing Schedule; and (B) any day with a
scheduled early market close (``Scheduled Early Close'') may be
excluded from the options tier calculations only pursuant to paragraph
(3) below.
(2) The Exchange may exclude the following days (``Unanticipated
Events'') from the options tier calculations only pursuant to paragraph
(3) below, specifically any day that: (A) The market is not open for
the entire trading day, (B) the Exchange instructs members in writing
to route their orders to other markets, (C) the Exchange is
inaccessible to members during the 30-minute period before the opening
of trade due to an Exchange system disruption, or (D) the Exchange's
system experiences a disruption that lasts for more than 60 minutes
during regular trading hours.
(3) If a day is to be excluded as a result of paragraph (1)(B) or
(2) above, the Exchange will exclude the day from
[[Page 4865]]
any member's monthly options tier calculations as follows:
(A) The Exchange may exclude from the ADV calculation any Scheduled
Early Close or Unanticipated Event; and
(B) the Exchange may exclude from any other applicable options tier
calculation provided for in its Pricing Schedule (together with (3)(A),
``Tier Calculations'') any Scheduled Early Close or Unanticipated
Event.
provided, in each case, that the Exchange will only remove the day for
members that would have a lower Tier Calculation with the day included.
The proposed language: (i) Applies the rule for excluding days to
all volume based calculations rather than specified incentive
programs,\6\ (ii) expands upon the existing scenarios where the
Exchange may remove a day to adopt two additional situations related to
Exchange systems disruptions, (iii) categorizes the potential excluded
days into days that are known in advance (i.e., days in proposed
paragraph (1), including Scheduled Early Closes) and days that are not
(i.e., Unanticipated Events in proposed paragraph (2)), (iv) clarifies
how the potential excluded days proposed above would be removed from
the ADV and other applicable volume based tier calculations in the
Pricing Schedule, and (v) generally adds more detail to clarify the
application of the better of rule. As it relates to Unanticipated
Events, the Exchange will inform all members if any such day will be
excluded from its Tier Calculations through a system status message
disseminated to all members. The Exchange notes that it is not
proposing to amend the thresholds a member must achieve to become
eligible for, or the dollar amount associated with, the tiered rebates
or fees.
---------------------------------------------------------------------------
\6\ See note 4 above. Since the proposed language will now apply
to all current and future programs administered by the Exchange that
are based on ADV and other applicable volume calculations, the
current rule in Options 7, Section 3 will be replaced by the
proposed language in Section 1(a) with the modifications described
above, including language providing that the rule will apply to all
Tier Calculations in its Pricing Schedule.
---------------------------------------------------------------------------
Rule Application
Currently, the Exchange's rule for removing a day from its ADV
calculations applies to specific ADV calculations of Total Affiliated
\7\ and/or Appointed Member \8\ ADV \9\ and Total Affiliated and/or
Appointed Priority Customer ADV.\10\ As applied, the Exchange can
remove a day from tier calculations for the maker fees \11\ and taker
fees \12\ assessed to members.\13\ The Exchange now believes it is
appropriate to expand this provision to cover all volume based
calculations including ADV rather than limit it to specific enumerated
programs. Applying this rule to all volume based calculations will
benefit members by permitting the Exchange to exclude atypical low
volume days from its volume calculations regardless of the specific
pricing program impacted. As is the case today, the Exchange would only
remove the day for members that would have a lower volume calculation
with the day included. This change will standardize the Exchange's
practice with Phlx, which currently applies its rule to cover all ADV
and other volume calculations set forth in its pricing schedule rather
than specified programs.\14\
---------------------------------------------------------------------------
\7\ An ``Affiliated Member'' is a Member that shares at least
75% common ownership with a particular Member as reflected on the
Member's Form BD, Schedule A.
\8\ An ``Appointed Member'' is either an Appointed Market Maker
or Appointed Order Flow Provider. An ``Appointed Market Maker'' is a
Market Maker who has been appointed by an Electronic Access Member
pursuant to Section 3, Table 3. An ``Appointed Order Flow Provider''
is an Electronic Access Member who has been appointed by a Market
Maker pursuant to Section 3, Table 3.
\9\ Total Affiliated and/or Appointed Member ADV means all ADV
executed on the Exchange in all symbols and order types, including
volume executed by Affiliated Members and/or Appointed Members. All
eligible volume from Affiliated Members will be aggregated in
determining applicable tiers. All eligible volume from an Appointed
Order Flow Provider will be aggregated with its designated Appointed
Market Maker's eligible volume in determining the Appointed Market
Maker's applicable tiers, provided the Appointed Market Maker is
designated by the Appointed Order Flow Provider in accordance with
Section 3, Table 3. An Appointed Market Maker is eligible to receive
and aggregate volume credit from both their Affiliated Members and
their Appointed Order Flow Provider. An Appointed Order Flow
Provider will not receive volume credit from its Appointed Market
Maker or the Appointed Market Maker's Affiliated Members in
determining its applicable tiers.
\10\ Total Affiliated and/or Appointed Priority Customer ADV
means all Priority Customer ADV executed on the Exchange in all
symbols and order types, including volume executed by Affiliated
Members and/or Appointed Members. The Exchange aggregates volume
executed by Affiliated Members and Appointed Members in the same
manner as it aggregates volume for purposes of Total Affiliated and/
or Appointed Member ADV. See note 9 above.
\11\ Members are charged tiered maker fees in Penny Symbols and
Non-Penny Symbols, all of which are based on Total Affiliated and/or
Appointed Member ADV. See Options 7, Section 3, Table 1.
\12\ Members are charged tiered taker fees in Penny Symbols and
Non-Penny Symbols, all of which are based on Total Affiliated and/or
Appointed Member ADV. See Options 7, Section 3, Table 1. A reduced
Market Maker taker fee in Penny and Non-Penny Symbols of $0.05 per
contract applies instead of the applicable Market Maker taker fee
when trading with Priority Customer orders entered by an Affiliated
Member or Appointed Member if the Member has a Total Affiliated and/
or Appointed Priority Customer ADV of 5,000 contracts or more. This
Market Maker taker fee is further reduced to $0.00 per contract when
trading with Priority Customer orders entered by an Affiliated
Member or Appointed Member if the Member has a Total Affiliated and/
or Appointed Priority Customer ADV of 50,000 contracts or more. See
Options 7, Section 3, Table 1, note 2.
\13\ The highest tier threshold attained applies retroactively
in a given month to all eligible traded contracts and applies to all
eligible market participants.
\14\ See note 3 above.
---------------------------------------------------------------------------
Exchange Systems Disruptions
The Exchange proposes to adopt two additional scenarios as
``Unanticipated Events'' that the Exchange may determine to exclude
from its Tier Calculations. First, the Exchange proposes to exclude
days where the Exchange is inaccessible to members during the 30-minute
period before the opening of trade (i.e., between 9:00 a.m. to 9:30
a.m. Eastern Time) due to an Exchange system disruption, even if the
Exchange does not instruct members to route away to other markets. As
discussed above, the Exchange's current ability to remove days is
limited to days where the market is not open for the entire trading
day, and where the Exchange instructs members to route away to other
markets. This allows the Exchange to exclude days, for example, where
the Exchange honors a market-wide trading halt declared by another
market, closes early for holiday observance, or instructs members to
route away to other markets because of a systems issue in the morning,
which ultimately does not carry over into the trading day. The Exchange
notes, however, that it may not always instruct members to route away.
For instance, the Exchange may be inaccessible to members in the
morning due to a systems disruption but the Exchange resolves the issue
shortly before 9:30 a.m. and as a result, the Exchange does not
instruct members to route away. In such cases, the Exchange is not
permitted to exclude the day from its ADV calculations. The Exchange
generally experiences a high volume of member participation within the
30-minute window leading up to the opening of trade from members who
submit eligible interest be included in the Exchange's opening process.
As a result, days where members are precluded from submitting eligible
interest during this 30-minute time period due to an Exchange systems
disruption, even if the issue is ultimately resolved by the Exchange
before the market opens (and members
[[Page 4866]]
therefore are not instructed to route away), are likely to have lower
trading volume. Including such days in calculations of ADV will
therefore make it more difficult for members to achieve particular
pricing tiers for that month. Accordingly, excluding such days will
diminish the likelihood of a cost increase occurring because a member
is not able to reach a pricing tier on that date that it would reach on
other trading days during the month. Phlx currently has identical
language allowing it to remove such days from its volume based
tiers.\15\
---------------------------------------------------------------------------
\15\ See id. at paragraph 2(C).
---------------------------------------------------------------------------
Second, the Exchange proposes to exclude days where there is an
Exchange system disruption that lasts for more than 60 minutes during
regular trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time), even
if such disruption would not be categorized as a complete outage of the
Exchange's system. Such a disruption may occur where a certain options
series traded on the Exchange is unavailable for trading due to an
Exchange systems issue, or where the Exchange may be able to perform
certain functions with respect to accepting and processing orders, but
may have a failure to another significant process, such as routing to
other market centers, that would lead members who rely on such
processes to avoid using the Exchange until the Exchange's entire
system was operational. The Exchange believes that certain system
disruptions that are not complete system outages could preclude some
members from submitting orders to the Exchange. The Exchange notes that
this proposal is consistent with the rules of Phlx and other options
exchanges.\16\
---------------------------------------------------------------------------
\16\ See id. at paragraph 2(D). See also BATS [sic] BZX Options
Exchange Fee Schedule (defining an ``Exchange System Disruption'' as
any day that the exchange's system experiences a disruption that
lasts for more than 60 minutes during regular trading hours); and
NYSE Arca Options Fee Schedule (defining an ``Exchange System
Disruption'' as a disruption affects an Exchange system that lasts
for more than 60 minutes during regular trading hours).
---------------------------------------------------------------------------
The Exchange believes that the two scenarios proposed above are
reasonable and equitable because the intent of the current rule has
always been to avoid penalizing members that might otherwise qualify
for certain tiered pricing but that because of aberrant low volume days
resulting, for instance, from Exchange systems disruptions, did not
participate on the Exchange to the extent they might have otherwise
participated.
In addition, to avoid penalizing members that step up and trade on
a day with artificially low volume, the Exchange currently only removes
days for members that would have a lower ADV calculation with the day
included (i.e., the better of rule). The Exchange believes that
applying the better of rule to the proposed system disruption-related
scenarios would be similarly helpful as it would ensure that members
that continue to execute a large volume of contracts on such days are
not inadvertently disadvantaged when the Exchange removes a systems
disruption-related day from its calculations of ADV. This is consistent
with the treatment of such days on Phlx.\17\
---------------------------------------------------------------------------
\17\ See note 3 above at paragraph 3.
---------------------------------------------------------------------------
Categories of Excluded Days
Similar to Phlx, the Exchange seeks to restructure the existing
rule by separating out the different scenarios between days that are
known in paragraph (1) and days that are not in paragraph (2), and
define the latter as Unanticipated Events.
For planned days, the Exchange proposes to further distinguish
between days that the Exchange announces in advance that it will not be
open for trading in paragraph (1)(A) (e.g., Thanksgiving), and
Scheduled Early Closes in paragraph (1)(B) (e.g., the trading day after
Thanksgiving). The Exchange notes that it currently considers Scheduled
Early Closes as a subset of days that the market is not open for the
entire trading day. The Exchange believes it would be more clear to
distinguish Scheduled Early Closes in paragraph (1) as a day that is
planned for in advance, and separately consider days that are not open
for the entire trading day as Unanticipated Events in paragraph (2)(A).
As proposed, (2)(A) would continue to cover unplanned days where the
Exchange declares a trading halt in all securities or honors a market-
wide trading halt declared by another market. The other scenarios that
will be categorized as Unanticipated Events in paragraph (2) are the
two systems-related disruptions proposed above, and days that the
Exchange instructs members in writing to route their orders to other
markets, which is an existing scenario covered under the current rule
as described above.
Exclusion of Days by Tier Calculation
The Exchange proposes to further amend the existing rule to align
with the Phlx rule by specifying how the days in paragraphs (1) and (2)
will be excluded from its Tier Calculations. As it relates to days
where the Exchange announces in advance that it will not be open for
trading, the Exchange notes that it will exclude those days from all
options tier calculations set forth in its Pricing Schedule.\18\ This
is also the case today since no trading activity occurs on those days,
and the Exchange is only clarifying its current practice within the
proposed rule text in paragraph (1)(A).
---------------------------------------------------------------------------
\18\ See id. at paragraph (1)(A) for similar language on Phlx.
---------------------------------------------------------------------------
As discussed above, the Exchange currently removes Scheduled Early
Closes as provided in paragraph (1)(B), and the Unanticipated Events in
paragraphs (2)(A) and (2)(B), from its calculations of ADV only for
members that would have a lower ADV with the day included. The Exchange
is not changing how it currently excludes these days from the ADV
calculations. And as further discussed above, the Exchange is proposing
to adopt the same principle-based approach for excluding the two
Unanticipated Events related to Exchange system disruptions as provided
in paragraphs (2)(C) and (2)(D). Accordingly, the proposed language in
paragraph (3)(A) will clarify for the ADV calculation that the Exchange
may exclude any Scheduled Early Close or Unanticipated Event, subject
to the better of rule.\19\
---------------------------------------------------------------------------
\19\ See id. at paragraph (3)(A) for similar language on Phlx.
---------------------------------------------------------------------------
Similar to Phlx, the proposal also adds a ``catch-all'' provision
in paragraph (3)(B) that would apply to other applicable volume based
tier calculations that are set forth in its Pricing Schedule, but are
not specified within paragraph (3)(A) (i.e., not an ADV
calculation).\20\ This catch-all provision will provide the Exchange
with flexibility to apply the better of rule going forward to all
pricing programs administered by the Exchange that are based on volume
calculations. The Exchange believes that adopting a similar principle-
based approach for its options volume calculations would ensure that
days are removed from such calculations only if doing so would be
beneficial for the member. Accordingly, the proposed language will not
apply to straight volume accumulations, as is the case today, and the
Exchange will continue to not exclude days from such calculations as
members do not benefit when volume executed on an excluded day is
removed from straight volume accumulations.
---------------------------------------------------------------------------
\20\ See id. at paragraph (3)(C) for similar language on Phlx.
---------------------------------------------------------------------------
Clarifying Changes
The Exchange proposes to add further details similar to Phlx's rule
to bring greater transparency as to how the Exchange will apply the
better of rule when removing days from its Tier Calculations. In
particular, the Exchange
[[Page 4867]]
proposes to make clear that it will only remove days pursuant to the
better of rule by specifying in paragraphs (1)(B) and (2) that such
days may be excluded from the Tier Calculations only pursuant to
paragraph (3).\21\ Paragraph (3) will then provide that if a day is to
be excluded as a result of paragraph (1)(B) or (2), the Exchange will
be required to exclude the day from any member's monthly options volume
tier calculations as detailed within paragraph (3).\22\ With the
proposed changes, the Exchange seeks to clarify that it will exclude
days from any member's Tier Calculations in a uniform manner to ensure
that days are removed only in situations where the member benefits. The
Exchange will look at each potential excluded day in a month and
determine for every member their ADV or other applicable volume
calculation based on their trading volume on that day. If any member
would have a lower Tier Calculation with the particular day included,
the Exchange will exclude that day for that member. This is how the
Exchange applies the better of rule today for ADV calculations. As
such, the proposed changes are intended to make clear that the Exchange
will apply the better of rule in a uniform manner for all members, and
that there is no arbitrary selection of ``winners'' or ``losers'' when
the Exchange excludes days. In addition, the Exchange proposes to make
two technical changes within the better of rule; first, to clarify that
the rule applies in each case of the tier calculations specified in
paragraph (3), and second, to use the defined term Tier Calculations
instead of ADV to reflect the changes proposed herein.
---------------------------------------------------------------------------
\21\ See id. at paragraphs (1)(B) and (2) for similar language
on Phlx.
\22\ See id. at paragraph (3) for similar language on Phlx.
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\23\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\24\ 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, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78f(b).
\24\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is reasonable
and equitable as it provides a new framework for removing days from the
Exchange's volume calculations that the Exchange believes is beneficial
to members and consistent with similar provisions already in place on
Phlx. The proposed rule change would permit the Exchange to remove a
day from its pricing tiers in more circumstances, and ensures that the
Exchange will only do so in circumstances where beneficial for the
member because the member would have a lower volume calculation the
with the day included.
By applying the rule to all volume based calculations rather than
specified incentive programs based on Total Affiliated and/or Appointed
Member ADV and Total Affiliated and/or Appointed Priority Customer ADV,
the Exchange believes that members will be further protected if the
Exchange experiences a systems or other issue that results in a day
being excluded from the Exchange's volume calculations. Without this
change, members would only have the day excluded for the specific ADV
based pricing programs described above, and would not get the benefit
for other un-enumerated programs.
The Exchange believes it is reasonable and equitable to exclude a
day from its volume based calculations when the Exchange's system
experiences a disruption during the 30-minute period prior to the
opening of trade that renders the Exchange inaccessible to members as
this preserves the Exchange's intent behind adopting volume-based
pricing. Without this change, members that are precluded from
submitting eligible interest during the 30-minute window before the
opening of trade may be negatively impacted, even if the Exchange
resolves the issue before the market opens and as a result, does not
instruct members to route away. The proposed change to exclude such
days will diminish the likelihood of a cost increase occurring because
a member is not able to reach a volume tier calculation on that date
that it would reach on other trading days during the month.
Similarly, excluding a day where the Exchange's system experiences
a disruption that lasts for more than 60 minutes intra-day is
reasonable and equitable because the proposal seeks to avoid penalizing
members that might otherwise qualify for certain tiered pricing but
that, because of an Exchange systems disruption, did not participate on
the Exchange to the extent they might have otherwise participated. The
Exchange believes that certain systems disruptions could preclude some
members from sending order flow to the Exchange even if such issue is
not actually a complete systems outage.
In addition, the Exchange believes that it is reasonable and
equitable to apply the better of rule to both systems disruption-
related scenarios. Without these changes, members that step up and
trade significant volume on excluded trading days may be negatively
impacted, resulting in an effective cost increase for those members.
The proposal would align the Exchange's approach to how it applies this
rule today for days where the market is not open for the entire trading
day or where the Exchange instructs members to route away.
Furthermore, the Exchange believes that categorizing the potential
excluded days is reasonable and equitable because it will bring greater
transparency to the application of its rule. Specifically, the Exchange
is distinguishing between planned and unplanned days in paragraphs (1)
and (2), defining the latter as Unanticipated Events, and stipulating
how the Exchange will exclude such days pursuant to this rule.
Categorizing days in this manner will clarify the application of its
rule in light of the Exchange's proposal to expand the rule to adopt
additional days that may be excluded from its tier calculations.
Providing in paragraph (1)(A) that the Exchange will always exclude
from its tier calculations days that it announces in advance it will
not be open for trading will clarify current practice. Furthermore, the
Exchange believes that the proposed changes to specify how days in
paragraphs (1) and (2) may be excluded from its tier calculations will
bring greater transparency by delineating the various circumstances in
which the better of rule will apply. Providing in paragraph (3) that
the Exchange may exclude any Scheduled Early Close or Unanticipated
Event from the ADV and other Tier Calculations, subject to the better
of rule, will make clear that the Exchange will take a consistent
approach when excluding days for purposes of its volume based pricing
tiers. In addition, having a catch-all in paragraph (3)(B) so that the
better of rule applies to other options volume calculations than ADV to
allow the Exchange to apply the rule going forward to all pricing
programs based on volume calculations will further protect members. The
Exchange notes that aberrant low volume days resulting from, for
instance, an Unanticipated Event, impacts all volume-based
calculations, and allowing the Exchange to exclude such days from any
Tier Calculation if the member would have a lower Tier Calculation with
the day included will further protect members from being inadvertently
penalized.
Furthermore, the proposed changes specifying that the days in
paragraphs
[[Page 4868]]
(1)(B) and (2) may be excluded only pursuant to paragraph (3), and
requiring the Exchange to exclude such days pursuant to the
specifications in paragraph (3) will likewise make clear that the
Exchange will take a consistent approach with respect to excluding days
from its volume calculations. As discussed above, these modifications
will clarify that the Exchange will apply the better of rule in a
uniform manner to all members, and that there is no arbitrary selection
of ``winners'' or ``losers.'' The Exchange also believes that the two
technical changes proposed in the better of rule to reflect the changes
proposed herein will likewise bring greater clarity to its rule.
Finally, the Exchange further believes that the proposed rule
change is not unfairly discriminatory because it will apply equally to
all members. While the Exchange currently has rules in place for
removing a day from its pricing, the Exchange believes that the
proposed changes will benefit all members by providing more
circumstances to remove a day, and ensuring that such days are removed
only in situations where the member benefits.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change is
designed to protect members from the possibility of a cost increase by
excluding days when overall member participation might be significantly
lower than a typical trading day. The Exchange believes that the
proposed modifications to its tier calculations are pro-competitive and
will result in lower total costs to end users, a positive outcome of
competitive markets. Furthermore, other options exchanges have adopted
rules that are substantially similar to the Exchange's proposal.\25\
---------------------------------------------------------------------------
\25\ See notes 3 and 16 above.
---------------------------------------------------------------------------
The Exchange operates in a highly competitive market in which
market participants can readily direct their order flow to competing
venues. In such an environment, the Exchange must continually review,
and consider adjusting, its fees and rebates to remain competitive with
other exchanges. For the reasons described above, the Exchange believes
that the proposed fee changes reflect this competitive environment.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or 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.\26\ 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: (i) Necessary or appropriate in the public
interest; (ii) for the protection of investors; or (iii) 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.
---------------------------------------------------------------------------
\26\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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-MRX-2019-01 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-MRX-2019-01. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MRX-2019-01 and should be submitted on
or before March 12, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------
\27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02606 Filed 2-15-19; 8:45 am]
BILLING CODE 8011-01-P