[Federal Register Volume 87, Number 51 (Wednesday, March 16, 2022)]
[Notices]
[Pages 14923-14931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05483]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94394; File No. SR-MEMX-2022-01]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule
March 10, 2022.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 28, 2022, MEMX LLC (``MEMX'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``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.
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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 with the Commission a proposed rule change
to amend the Exchange's fee schedule applicable to Members \3\ (the
``Fee Schedule'') pursuant to Exchange Rules 15.1(a) and (c). The
Exchange proposes to implement the changes to the Fee Schedule pursuant
to this proposal on March 1, 2022. The text of the proposed rule change
is provided in Exhibit 5.
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\3\ See Exchange Rule 1.5(p).
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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 Fee
Schedule to: (i) Adopt a new NBBO Setter Tier that provides an additive
rebate for executions of orders in securities priced at or above $1.00
per share that add displayed liquidity to the Exchange (such orders,
``Added Displayed Volume'') and that establish the national best bid or
offer (``NBBO''); (ii) modify the Exchange's pricing for executions of
orders in securities priced at or above $1.00 per share that add non-
displayed liquidity to the Exchange (such orders, ``Added Non-Displayed
Volume'') by reducing the standard rebates for such executions and
adopting tiered pricing under new Non-Display Add Tiers that provide
enhanced rebates for such executions; (iii) modify the required
criteria under Liquidity Provision Tier 3; (iv) reduce the standard
rebate for executions of Added Displayed Volume; (v) reduce the
standard rebate for executions of Retail Orders \4\ in
[[Page 14924]]
securities priced at or above $1.00 per share that add displayed
liquidity to the Exchange (such orders, ``Added Displayed Retail
Volume''); (vi) increase the standard fee for executions of orders in
securities priced at or above $1.00 per share that remove liquidity
from the Exchange (such orders ``Removed Volume''); (vii) modify
Liquidity Removal Tier 1 by increasing the fee for executions of
Removed Volume and modifying the required criteria under such tier;
(viii) eliminate the DLI Additive Rebate for DLI Tier 2; and (ix)
eliminate the Targeted Step-Up Tier.
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\4\ A ``Retail Order'' means an agency or riskless principal
order that meets the criteria of FINRA Rule 5320.03 that originates
from a natural person and is submitted to the Exchange by a Retail
Member Organization (``RMO''), provided that no change is made to
the terms of the order with respect to price or side of market and
the order does not originate from a trading algorithm or any other
computerized methodology. See Exchange Rule 11.21(a).
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The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 registered equities exchanges, as well as a
number of alternative trading systems and other off-exchange venues, to
which market participants may direct their order flow. Based on
publicly available information, no single registered equities exchange
currently has more than approximately 16.5% of the total market share
of executed volume of equities trading.\5\ Thus, in such a low-
concentrated and highly competitive market, no single equities exchange
possesses significant pricing power in the execution of order flow, and
the Exchange currently represents approximately 4% of the overall
market share.\6\ The Exchange in particular operates a ``Maker-Taker''
model whereby it provides rebates to Members that add liquidity to the
Exchange and charges fees to Members that remove liquidity from the
Exchange. The Fee Schedule sets forth the standard rebates and fees
applied per share for orders that add and remove liquidity,
respectively. Additionally, in response to the competitive environment,
the Exchange also offers tiered pricing, which provides Members with
opportunities to qualify for higher rebates or lower fees where certain
volume criteria and thresholds are met. Tiered pricing provides an
incremental incentive for Members to strive for higher tier levels,
which provides increasingly higher benefits or discounts for satisfying
increasingly more stringent criteria.
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\5\ Market share percentage calculated as of February 25, 2022.
The Exchange receives and processes data made available through
consolidated data feeds (i.e., CTS and UTDF).
\6\ Id.
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Adoption of NBBO Setter Tier
The Exchange proposes to adopt a new volume-based tier, referred to
by the Exchange as the NBBO Setter Tier, in which the Exchange will
provide an additive rebate for executions of Added Displayed Volume
(other than Retail Orders) that establish the NBBO (such orders,
``Setter Volume'').\7\ Under the proposed NBBO Setter Tier, the
Exchange will provide an additive rebate of $0.0003 per share for
executions of Setter Volume for a Member that qualifies for the NBBO
Setter Tier by achieving an ADAV \8\ with respect to orders with Fee
Code ``B'' (as assigned on the execution reports provided by the
Exchange \9\) that is equal to or greater than 0.10% of the TCV.\10\
The $0.0003 per share additive rebate will be provided in addition to
the rebate that is otherwise applicable to each of a qualifying
Members' orders that constitutes Setter Volume (including a rebate
provided under another pricing tier/incentive).\11\ The Exchange notes
that the additive rebate will not apply to executions of orders in
securities priced below $1.00 per share.
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\7\ An order that is entered at the most aggressive price both
on the Exchange's order book and according to the then-current
consolidated data from the applicable securities information
processor and direct data feeds used by the Exchange will be
determined to have established the NBBO for purposes of the NBBO
Setter Tier without regard to whether a more aggressive order is
entered prior to the original order being executed.
\8\ As set forth on the Fee Schedule, ``ADAV'' means the average
daily added volume calculated as the number of shares added per day,
which is calculated on a monthly basis.
\9\ The Exchange notes that all orders (other than Retail
Orders, which are assigned a Fee Code of ``Br'') in securities
priced below, at or above $1.00 per share that add displayed
liquidity to the Exchange and that establish the NBBO are assigned a
Fee Code of ``B'' on the execution reports provided by the Exchange.
The Exchange further notes that the Fee Code assigned to any such
order to indicate that such order also qualifies for a pricing tier/
incentive (e.g., ``B1'', ``B2'', ``B3'', ``Bq1'' and ``Bq2'') is not
provided on the execution reports but instead is provided on the
monthly invoices after a determination of tier/incentive
qualification for a particular month has been made; thus, any such
order that also qualifies for a pricing tier/incentive would still
be assigned a Fee Code of ``B'' (rather than the applicable tier/
incentive Fee Code) on the execution reports and would therefore be
counted in determining whether a Member qualifies for the NBBO
Setter Tier.
\10\ As set forth on the Fee Schedule, ``TCV'' means total
consolidated volume calculated as the volume reported by all
exchanges and trade reporting facilities to a consolidated
transaction reporting plan for the month for which the fees apply.
\11\ The proposed pricing for the NBBO Setter Tier is referred
to by the Exchange on the Fee Schedule under the new description
``NBBO Setter Tier'' with a Fee Code of ``S'' to be appended to the
otherwise applicable Fee Code assigned by the Exchange on the
monthly invoices for qualifying executions (including Fee Codes
``B'', ``B1'', ``B2'', ``B3'', ``Bq1'' and ``Bq2'').
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The proposed NBBO Setter Tier is designed to attract aggressively
priced displayed liquidity to the Exchange by providing an additional
rebate for executions of Setter Volume to Members that contribute to
establishing the NBBO on the Exchange by achieving the Fee Code ``B''
volume threshold described above, thereby promoting price discovery and
market quality on the Exchange. The Exchange notes that the proposed
NBBO Setter Tier is comparable to other volume-based incentives and
discounts, which have been widely adopted by exchanges (including the
Exchange), including similar pricing incentives applicable to
executions of orders that establish the NBBO.\12\
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\12\ See, e.g., Securities Exchange Act Release No. 73813
(December 11, 2014), 79 FR 75197 (December 17, 2014) (SR-BATS-2014-
063) (notice of filing and immediate effectiveness of fee changes
adopted by BATS, including the adoption of ``NBBO Setter Tiers''
that provide additive rebates for executions of orders that
establish the NBBO to Members that qualify for such tiers by
achieving a specified ADAV threshold with respect to orders that add
displayed liquidity and that establish the NBBO).
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Modify Pricing for Added Non-Displayed Volume
The Exchange proposes to modify its pricing for executions of Added
Non-Displayed Volume by reducing the standard rebates for such
executions and adopting tiered pricing under new Non-Display Add Tiers
that provide enhanced rebates for such executions. Added Non-Displayed
Volume includes both: (i) Pegged Orders \13\ with a Midpoint Peg \14\
instruction (such orders, ``Midpoint Peg orders'') in securities priced
at or above $1.00 per share that add liquidity to the Exchange (such
orders, ``Added Midpoint Volume'') and (ii) orders that are not
Midpoint Peg orders in securities priced at or above $1.00 per share
that add non-displayed liquidity to the Exchange (such orders, ``Added
Non-Midpoint Hidden Volume'').
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\13\ Pegged Orders are described in Exchange Rules 11.6(h) and
11.8(c) and generally defined as an order that is pegged to a
reference price and automatically re-prices in response to changes
in the NBBO.
\14\ A Midpoint Peg instruction is an instruction that may be
placed on a Pegged Order that instructs the Exchange to peg the
order to midpoint of the NBBO. See Exchange Rule 11.6(h)(2).
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Currently, the Exchange provides standard rebates of $0.0025 per
share and $0.0020 per share for executions of Added Midpoint Volume and
Added Non-Midpoint Hidden Volume, respectively. The Exchange now
proposes to reduce each of these
[[Page 14925]]
standard rebates to $0.0018 per share.\15\ The purpose of reducing the
standard rebates for executions of Added Midpoint Volume and Add Non-
Midpoint Hidden Volume is for business and competitive reasons, as the
Exchange believes reducing such rebates as proposed would decrease the
Exchange's expenditures with respect to its transaction pricing in a
manner that is still consistent with the Exchange's overall pricing
philosophy of encouraging added displayed liquidity. The Exchange notes
that the proposed standard rebate for executions of Added Midpoint
Volume remains higher than, and competitive with, the standard rebates
provided by at least one other exchange for executions of similar
orders.\16\ The Exchange also notes that the proposed standard rebate
for executions of Added Non-Midpoint Hidden Volume remains higher than,
and competitive with, the standard rebates provided by at least one
other exchange for executions of similar orders.\17\
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\15\ The proposed standard pricing for executions of Added
Midpoint Volume is referred to by the Exchange on the Fee Schedule
under the existing description ``Added non-displayed volume,
Midpoint Peg'' and such orders will continue to receive a Fee Code
of ``M'' on execution reports. The proposed standard pricing for
executions of Added Non-Midpoint Hidden Volume is referred to by the
Exchange on the Fee Schedule under the existing description ``Added
non-displayed volume'' and such orders will continue to receive a
Fee Code of ``H'' on execution reports.
\16\ See, e.g., the Nasdaq Price List--Trading Connectivity
(available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2), which reflects a standard rebate
of $0.0014 per share for executions of orders in Tape A and Tape B
securities priced at or above $1.00 per share that add non-displayed
midpoint liquidity and a standard rebate of $0.0010 per share for
executions of orders in Tape C securities priced at or above $1.00
per share that add non-displayed midpoint liquidity.
\17\ See, e.g., the Cboe BZX Exchange, Inc. (``Cboe BZX'')
equities trading fee schedule on its public website (available at
https://www.cboe.com/us/equities/membership/fee_schedule/bzx/),
which reflects a standard rebate of $0.0010 per share for executions
of orders in securities priced at or above $1.00 per share that add
non-displayed liquidity.
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In connection with the proposed reduction of the standard rebates
for executions of Added Non-Displayed Volume (i.e., both Added Midpoint
Volume and Added Non-Midpoint Hidden Volume) described above, the
Exchange is proposing to adopt new volume-based tiers applicable to
such executions, referred to by the Exchange as Non-Display Add Tiers 1
and 2, in which the Exchange would provide enhanced rebates for
executions of Added Non-Displayed Volume for Members that achieve the
associated volume thresholds. Specifically, under proposed Non-Display
Add Tier 1, the Exchange would provide a rebate of $0.0028 per share
for executions of Added Non-Displayed Volume for Members that qualify
for such tier by achieving a Non-Displayed ADAV \18\ that is equal to
or greater than 5,000,000 shares.\19\ Additionally, under proposed Non-
Display Add Tier 2, the Exchange would provide a rebate of $0.0024 per
share for executions of Added Non-Displayed Volume for Members that
qualify for such tier by achieving a Non-Displayed ADAV that is equal
to or greater than 1,000,000 shares (but less than 5,000,000
shares).\20\ The Exchange proposes to provide Members that qualify for
Non-Display Add Tier 1 or Non-Display Add Tier 2 free executions of
orders (including Midpoint Peg orders) in securities priced below $1.00
per share that add non-displayed liquidity to the Exchange, which is
the same as the standard pricing that is currently applicable to such
executions for all Members.
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\18\ As proposed, the term ``Non-Displayed ADAV'' means ADAV
with respect to non-displayed orders (including Midpoint Peg
orders). The Exchange proposes to add this definition of Non-
Displayed ADAV under the ``Definitions'' section of the Fee
Schedule.
\19\ The proposed pricing for Non-Display Add Tier 1 is referred
to by the Exchange on the Fee Schedule under the new description
``Added non-displayed volume, Non-Display Add Tier 1'' with a Fee
Code of ``H1'' for qualifying Added Non-Midpoint Hidden Volume and a
Fee Code of ``M1'' for qualifying Added Midpoint Volume assigned on
the monthly invoices provided by the Exchange. The Exchange notes
that because the determination of whether a Member qualifies for
Non-Display Add Tier 1 for a particular month will not be made until
after the month-end, the Exchange will provide the Fee Code
otherwise applicable to such transactions (i.e., ``H'' or ``M'', as
applicable) on the execution reports provided to Members during the
month, and it will only designate the Fee Code applicable to the
achieved pricing tier on the monthly invoices, which are provided
after such determination has been made. The Exchange also notes that
this is how it applies Fee Codes for its tier-based pricing today
and how it will apply Fee Codes for any other tier-based pricing
described herein.
\20\ The proposed pricing for Non-Display Add Tier 2 is referred
to by the Exchange on the Fee Schedule under the new description
``Added non-displayed volume, Non-Display Add Tier 2'' with a Fee
Code of ``H2'' for qualifying Added Non-Midpoint Hidden Volume and a
Fee Code of ``M2'' for qualifying Added Midpoint Volume assigned on
the monthly invoices provided by the Exchange.
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The Exchange believes that the proposed Non-Display Add Tiers
provide an incremental incentive for Members to maintain or strive for
higher Non-Displayed ADAV on the Exchange in order to qualify for the
enhanced rebates for executions of Added Non-Displayed Volume, and as
such, are designed to encourage Members to maintain or increase their
order flow (particularly in the form of liquidity adding non-displayed
orders) to the Exchange, thereby contributing to a deeper and more
liquid market to the benefit of all market participants. The Exchange
notes that the proposed Non-Display Add Tiers are comparable to other
volume-based incentives and discounts, which have been widely adopted
by exchanges (including the Exchange), including pricing tiers that
provide enhanced rebates for executions of Added Non-Displayed
Volume.\21\
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\21\ For example, Cboe BZX currently offers ``Non-Display Add
Volume Tiers'' in which Cboe BZX provides enhanced rebates for
executions of orders in securities priced at or above $1.00 per
share that add non-displayed liquidity for members that qualify for
such tiers by achieving certain specified volume thresholds. See the
Cboe BZX equities trading fee schedule on its public website
(available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/).
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Modify Criteria Under Liquidity Provision Tier 3
The Exchange currently offers three Liquidity Provision Tiers in
which the Exchange provides enhanced rebates for executions of Added
Displayed Volume based on a Member achieving the corresponding volume-
based threshold (i.e., the required criteria) for a particular tier.
Currently, a Member qualifies for Liquidity Provision Tier 3, and thus
receives an enhanced rebate of $0.0027 per share for executions of
Added Displayed Volume under such tier, by achieving an ADAV that is
equal to or greater than 0.05% of the TCV. Now, the Exchange proposes
to modify the required criteria under Liquidity Provision Tier 3 such
that a Member would now qualify for such tier by achieving any of the
three following volume-based thresholds: (1) An ADAV that is equal to
or greater than 0.05% of the TCV; (2) a Step-Up Displayed ADAV \22\
from February 2022 that is equal to or greater than 0.02% of the TCV;
or (3) a Midpoint ADAV \23\ that is equal to or greater than 1,000,000
shares. Thus, such proposed changes would keep the existing ADAV
threshold intact and also provide two alternative volume thresholds
that a Member may choose to achieve in order to qualify for Liquidity
Provision Tier 3, including one threshold based on a Member increasing
its Displayed ADAV above its Displayed ADAV in February 2022, which is
designed to encourage Members to increase their orders that add
displayed liquidity to the Exchange,
[[Page 14926]]
and one threshold based on a Member maintaining or increasing its
Midpoint ADAV above the specified amount, which is designed to
encourage Members to maintain or increase their Midpoint Peg orders
that add liquidity to the Exchange. The Exchange is not proposing to
modify the pricing associated with Liquidity Provision Tier 3.
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\22\ As proposed, the term ``Step-Up Displayed ADAV'' means
Displayed ADAV in the relevant baseline month subtracted from
current Displayed ADAV. As proposed, the term ``Displayed ADAV''
means ADAV with respect to displayed orders. The Exchange proposes
to add these definitions of Step-Up Displayed ADAV and Displayed
ADAV under the ``Definitions'' section of the Fee Schedule.
\23\ As proposed, the term ``Midpoint ADAV'' means ADAV with
respect to Midpoint Peg orders. The Exchange proposes to add this
definition of Midpoint ADAV under the ``Definitions'' section of the
Fee Schedule.
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The Exchange believes that Liquidity Provision Tier 3, as modified,
would encourage the submission of more diverse types of order flow to
the Exchange, as it provides two additional alternative thresholds
based on different types of volume that Members may choose to achieve,
thereby contributing to a more robust and well-balanced market
ecosystem on the Exchange to the benefit of all Members. The Exchange
notes that Liquidity Provision Tier 3, as modified, would continue to
be available to all Members and, while the Exchange has no way of
predicting with certainty how the proposed new criteria will impact
Member activity, the Exchange expects that more Members will qualify
for such tier than currently do under the proposed new criteria, as it
is more expansive and provides two additional alternative thresholds
that Members may choose to achieve.
Reduce Standard Rebate for Added Displayed Volume
Currently, the Exchange provides a standard rebate of $0.0022 per
share for executions of Added Displayed Volume. The Exchange now
proposes to reduce the standard rebate for executions of Added
Displayed Volume to $0.0020 per share.\24\ The purpose of reducing the
standard rebate for executions of Added Displayed Volume is for
business and competitive reasons, as the Exchange believes that
reducing such rebate as proposed would decrease the Exchange's
expenditures with respect to its transaction pricing in a manner that
is still consistent with the Exchange's overall pricing philosophy of
encouraging added displayed liquidity. The Exchange notes that despite
the reduction proposed herein, the proposed standard rebate for
executions of Added Displayed Volume remains in line with, or higher
than, the standard rebates provided by other exchanges for executions
of orders in securities priced at or above $1.00 per share that add
displayed liquidity.\25\
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\24\ The proposed standard rebate for executions of Added
Displayed Volume is referred to by the Exchange on the Fee Schedule
under the existing description ``Added displayed volume'' with a Fee
Code of ``B'', ``D'' or ``J'', as applicable, on execution reports.
\25\ See, e.g., the NYSE Arca, Inc. equities trading fee
schedule on its public website (available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf),
which reflects a standard rebate of $0.0020 per share for executions
of orders in securities priced at or above $1.00 per share that add
displayed liquidity; the Cboe BZX equities trading fee schedule on
its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/), which reflects a standard rebate of
$0.0016 per share for executions of orders in securities priced at
or above $1.00 per share that add displayed liquidity; the Nasdaq
Stock Market LLC (``Nasdaq'') Price List--Trading Connectivity
(available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2), which reflects a standard rebate
of $0.0020 per share for executions of orders in Tape A and Tape B
securities priced at or above $1.00 per share that add displayed
liquidity and a standard rebate of $0.0015 per share for executions
of orders in Tape C securities priced at or above $1.00 per share
that add displayed liquidity.
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Reduce Standard Rebate for Added Displayed Retail Volume
Currently, the Exchange provides a standard rebate of $0.0037 per
share for executions of Added Displayed Retail Volume. The Exchange now
proposes to reduce the standard rebate for executions of Added
Displayed Retail Volume to $0.0035 per share.\26\ The purpose of
reducing the standard rebate for executions of Added Displayed Retail
Volume is for business and competitive reasons, as the Exchange
believes that reducing such rebate as proposed would decrease the
Exchange's expenditures with respect to its transaction pricing in a
manner that is still consistent with the Exchange's overall pricing
philosophy of encouraging added displayed liquidity. The Exchange notes
that despite the reduction proposed herein, the proposed standard
rebate for executions of Added Displayed Retail Volume remains higher
than, and competitive with, the standard rebates provided by other
exchanges for executions of attested retail orders in securities priced
at or above $1.00 per share that add displayed liquidity.\27\
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\26\ The proposed standard rebate for executions of Added
Displayed Retail Volume is referred to by the Exchange on the Fee
Schedule under the existing description ``Added displayed volume,
Retail Order'' with a Fee Code of ``Br'', ``Dr'' or ``Jr'', as
applicable, on execution reports.
\27\ See, e.g., the Cboe BZX equities trading fee schedule on
its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/bzx/), which reflects a standard rebate of
$0.0032 per share for executions of attested retail orders in
securities priced at or above $1.00 per share that add displayed
liquidity; the Cboe EDGX Exchange, Inc. (``Cboe EDGX'') equities
trading fee schedule on its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/), which
reflects a standard rebate of $0.0032 per share for executions of
attested retail orders in securities priced at or above $1.00 per
share that add displayed liquidity.
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Increase Standard Fee for Removed Volume
Currently, the Exchange charges a standard fee of $0.0029 per share
for executions of Removed Volume. The Exchange now proposes to increase
the standard fee for executions of Removed Volume to $0.0030 per
share.\28\ The purpose of increasing the standard fee for executions of
Removed Volume is for business and competitive reasons, as the Exchange
believes that increasing such fee as proposed would generate additional
revenue to offset some of the costs associated with the Exchange's
current pricing structure, which provides various rebates for
liquidity-adding orders, and the Exchange's operations generally, in a
manner that is still consistent with the Exchange's overall pricing
philosophy of encouraging added liquidity. The Exchange notes that
despite the increase proposed herein, the proposed standard fee for
executions of Removed Volume remains in line with the standard fees
charged by other exchanges for executions of orders in securities
priced at or above $1.00 per share that remove liquidity.\29\
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\28\ The proposed standard fee for executions of Removed Volume
is referred to by the Exchange on the Fee Schedule under the
existing description ``Removed volume from MEMX Book'' with a Fee
Code of ``R'' on execution reports.
\29\ See, e.g., the Cboe EDGX equities trading fee schedule on
its public website (available at https://www.cboe.com/us/equities/membership/fee_schedule/edgx/), which reflects a standard fee of
$0.0030 per share for executions of orders in securities priced at
or above $1.00 per share that remove liquidity; the Nasdaq Price
List--Trading Connectivity (available at http://nasdaqtrader.com/Trader.aspx?id=PriceListTrading2), which reflects a standard fee of
$0.0030 per share for executions of orders in securities priced at
or above $1.00 per share that remove liquidity.
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Modify Liquidity Removal Tier 1
The Exchange currently offers Liquidity Removal Tier 1 in which
qualifying Members are charged a discounted fee of $0.0028 per share
for executions of Removed Volume by achieving either: (1) An ADAV of at
least 0.50% of the TCV; or (2) an ADV of at least 0.70% of the TCV.
Now, the Exchange proposes to modify Liquidity Removal Tier 1 by
increasing the fee for executions of Removed Volume and modifying the
required criteria under such tier. Specifically, the Exchange proposes
to charge a fee of $0.00285 per share for executions of Removed Volume
for Members that qualify for Liquidity Removal Tier 1 by achieving
either: (1) An ADAV of at least 0.30% of the TCV; or (2) an ADV of at
least 0.60% of the TCV.\30\
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\30\ The proposed pricing for Liquidity Removal Tier 1 is
referred to by the Exchange on the Fee Schedule under the existing
description ``Removed volume from MEMX Book, Liquidity Removal Tier
1'' with a Fee Code of ``R1'' assigned on the monthly invoices
provided by the Exchange. The Exchange is not proposing to change
the fee charged under Liquidity Removal Tier 1 for executions of
securities priced below $1.00 per share.
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[[Page 14927]]
The Exchange believes that the proposed fee for executions of
Removed Volume under Liquidity Removal Tier 1 represents only a modest
increase from the current fee charged for such executions under such
tier. The purpose of increasing such fee as proposed is for business
and competitive reasons, as the Exchange believes that increasing such
fee would generate additional revenue to offset some of the costs
associated with the Exchange's current transaction pricing structure,
which provides various rebates for liquidity-adding orders, and the
Exchange's operations generally, in a manner that is still consistent
with the Exchange's overall pricing philosophy of encouraging added
liquidity. The Exchange notes that the proposed changes to the required
criteria under Liquidity Removal Tier 1 would lower both the ADAV
threshold and the ADV threshold such that each threshold would be
easier for Members to achieve and, in turn, while the Exchange has no
way of predicting with certainty how the proposed new criteria will
impact Member activity, the Exchange expects that more Members will
strive to qualify for such tier than currently do, resulting in the
submission of additional order flow to the Exchange. The Exchange also
notes that Liquidity Removal Tier 1, as modified, would continue to be
available to all Members.
Eliminate DLI Additive Rebate for DLI Tier 2
The Exchange proposes to eliminate the DLI Additive Rebate for DLI
Tier 2. Currently, the Exchange offers DLI Tiers 1 and 2 in which
qualifying Members are provided a corresponding enhanced rebate for
executions of Added Displayed Volume by quoting at the NBBO for a
significant portion of each day in a specified number of securities,
including a specified number of DLI Target Securities, with DLI Tier 1
providing a higher rebate than DLI Tier 2 commensurate with NBBO
quoting requirements in a larger number of securities. Additionally,
the Exchange currently offers a DLI Additive Rebate incentive that is
applicable to DLI Tiers 1 and 2, which provides an additive rebate of
$0.0001 per share for executions of Added Displayed Volume where: (1)
For a Member that qualifies for DLI Tier 1, such Member has an ADAV
that is equal to or greater than 0.30% of the TCV; and (2) for a Member
that qualifies for DLI Tier 2, such Member has an ADAV that is equal to
or greater than 0.10% of the TCV. The Exchange now proposes to
eliminate the DLI Additive Rebate for DLI Tier 2, but keep the DLI
Additive Rebate for DLI Tier 1. The reason for eliminating the DLI
Additive Rebate for DLI Tier 2 is that the incentive is not achieving
the level of participation that the Exchange expected, and thus, is not
accomplishing the goal that the Exchange had when initially adopting
this incentive. Due to the lower-than-expected level of participation,
the Exchange does not believe the proposed elimination of Targeted
Step-Up Tier [sic] will have a significant impact on any Member's
trading behavior on the Exchange. The Exchange therefore no longer
wishes to, nor is it required to, maintain such tier. More
specifically, the proposed change removes such incentive, as the
Exchange would rather redirect future resources and funding into other
incentives and tiers intended to incentivize increased order flow. The
Exchange notes that several Members currently qualify for the DLI
Additive Rebate for DLI Tier 1, which is why the Exchange is not
proposing to eliminate that incentive since it has achieved the
expected level of participation.
Eliminate Targeted Step-Up Tier
Finally, the Exchange proposes to eliminate the Targeted Step-Up
Tier. The Exchange currently offers the Targeted Step-Up Tier in which
it provides an additive rebate of $0.0002 per share to executions of
orders (other than displayed Retail Orders) in securities priced at or
above $1.00 per share that add liquidity to the Exchange (such orders,
``Added Volume'') for Members that qualify for such tier by achieving:
(1) A Step-Up ADAV \31\ from October 2021 that is equal to or greater
than 0.05% of the TCV in the Targeted Step-Up Securities; \32\ or (2)
an ADAV that is equal to or greater than 0.08% of the TCV in the
Targeted Step-Up Securities. The Exchange adopted the Targeted Step-Up
Tier in November 2021 for the purpose of encouraging Members to
increase their volume on the Exchange in the Targeted Step-Up
Securities, thereby improving its market quality with respect to such
securities and contributing to a more robust and well-balanced market
ecosystem on the Exchange to the benefit of all Members.\33\ The
Exchange now proposes to eliminate the Targeted Step-Up Tier, as the
incentive is not achieving the level of participation that the Exchange
expected, and thus, is not accomplishing the goal that the Exchange had
when initially adopting this incentive. Due to the lower-than-expected
level of participation, the Exchange does not believe the proposed
elimination of Targeted Step-Up Tier will have a significant impact on
any Member's trading behavior on the Exchange. The Exchange therefore
no longer wishes to, nor is it required to, maintain such tier. More
specifically, the proposed rule change removes such tier, as the
Exchange would rather redirect future resources and funding into other
programs and tiers intended to incentivize increased order flow.
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\31\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means
ADAV in the relevant baseline month subtracted from current ADAV.
\32\ As set forth on the Fee Schedule, ``Targeted Step-Up
Securities'' means a list of securities designated as such, the
universe of which will be determined by the Exchange and published
on the Exchange's website.
\33\ See Securities Exchange Act Release No. 93554 (November 10,
2021), 86 FR 64248 (November 17, 2021) (SR-MEMX-2021-16) (notice of
filing and immediate effectiveness of fee changes adopted by the
Exchange, including the adoption of the Targeted Step-Up Tier).
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In connection with the elimination of the Targeted Step-Up Tier,
the Exchange also proposes to delete the definition of the term
``Targeted Step-Up Securities'' from the ``Definitions'' section of the
Fee Schedule, as such term would no longer be used on the Fee Schedule.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\34\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\35\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among its Members and other persons using its facilities
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\34\ 15 U.S.C. 78f.
\35\ 15 U.S.C. 78f(b)(4) and (5).
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As discussed above, the Exchange operates in a highly fragmented
and competitive market in which market participants can readily direct
order flow to competing venues if they deem fee levels at a particular
venue to be excessive or incentives to be insufficient, and the
Exchange represents only a small percentage of the overall market. The
Commission and the courts have repeatedly expressed their preference
for competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
the Commission highlighted the importance of market forces in
[[Page 14928]]
determining prices and SRO revenues and also recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \36\
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\36\ Securities Exchange Act Release No. 51808 (June 9, 2005),
70 FR 37496, 37499 (June 29, 2005).
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The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
shift order flow or discontinue to reduce use of certain categories of
products, in response to new or different pricing structures being
introduced into the market. Accordingly, competitive forces constrain
the Exchange's transaction fees and rebates, and market participants
can readily trade on competing venues if they deem pricing levels at
those other venues to be more favorable. The Exchange believes the
proposal reflects a reasonable and competitive pricing structure
designed to incentivize market participants to direct additional
aggressively priced liquidity and more diverse types of order flow to
the Exchange, which the Exchange believes would enhance liquidity and
market quality on the Exchange to the benefit of all Members, as well
as to decrease the Exchange's expenditures and generate additional
revenue with respect to its transaction pricing in a manner that is
still consistent with the Exchange's overall pricing philosophy of
encouraging added displayed liquidity.
The Exchange believes that the proposed NBBO Setter Tier is a
reasonable means to encourage Members to not only increase their order
flow to the Exchange but also to contribute to price discovery and
market quality on the Exchange by submitting aggressively priced
displayed liquidity. As noted above, the proposed NBBO Setter Tier is
comparable to other volume-based incentives and discounts, which have
been widely adopted by exchanges (including the Exchange) and are
equitable and not unfairly discriminatory because they are open to all
Members on an equal basis and provide additional benefits or discounts
that are reasonably related to the value to an exchange's market
quality associated with higher levels of market activity, such as
higher levels of liquidity provision and/or growth patterns and the
introduction of higher volumes of orders into the price and volume
discovery process. The Exchange believes the proposed NBBO Setter Tier
is equitable and not unfairly discriminatory for these same reasons, as
it is available to all Members and is designed to incentivize the entry
of aggressively priced displayed liquidity that will create tighter
spreads, thereby promoting price discovery and market quality on the
Exchange to the benefit of all Members and public investors. As such,
the Exchange believes the additive rebate for executions of Setter
Volume provided under the NBBO Setter Tier for qualifying Members is
reasonably related to the market quality benefits that such tier is
designed to promote. Additionally, as noted above, at least one other
U.S. equity exchange has adopted a similar pricing incentive applicable
to executions of orders that establish the NBBO.\37\
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\37\ See supra note 12.
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The Exchange believes that the proposed changes to reduce the
standard rebates provided for executions of Added Non-Displayed Volume
(i.e., both Added Midpoint Volume and Added Non-Midpoint Hidden Volume)
are reasonable because, as described above, such changes are designed
to decrease the Exchange's expenditures with respect to its transaction
pricing in a manner that is still consistent with the Exchange's
overall pricing philosophy of encouraging added displayed liquidity,
and the proposed new standard rebates for executions of Added Midpoint
Volume and Added Non-Midpoint Hidden Volume remain higher than, and
competitive with, the standard rebates provided by other exchanges for
executions of similar orders.\38\ The Exchange also believes the
proposed standard rebates for executions of Added Midpoint Volume and
Added Non-Midpoint Hidden Volume are equitable and not unfairly
discriminatory, as such standard rebates will apply equally to all
Members.
---------------------------------------------------------------------------
\38\ See supra notes 16-17.
---------------------------------------------------------------------------
The Exchange believes that the proposed Non-Display Add Tiers 1 and
2 are reasonable because such tiers would provide Members with an
additional incentive to achieve certain volume thresholds on the
Exchange and, in return, receive enhanced rebates for Added Non-
Displayed Volume commensurate with the benefits of increased activity.
The Exchange also believes that the proposed Non-Display Add Tiers 1
and 2 are reasonable, equitable, and not unfairly discriminatory for
the same reasons applicable to other volume-based incentives and
discounts described above, in that such tiers would be available to all
Members and are designed to encourage Members to maintain or increase
their order flow (particularly in the form of liquidity adding non-
displayed orders) to the Exchange, thereby contributing to a deeper and
more liquid market to the benefit of all market participants. Further,
the proposed new Non-Display Add Tiers 1 and 2 are reasonable as such
tiers would provide Members with opportunities to qualify for enhanced
rebates for executions of Added Non-Displayed Volume in a manner that
provides increasingly higher benefits for satisfying increasingly more
stringent criteria.
The Exchange also believes it is reasonable, equitable and not
unfairly discriminatory to provide Members that qualify for Non-Display
Add Tier 1 or Non-Display Add Tier 2 free executions of orders
(including Midpoint Peg orders) in securities priced below $1.00 per
share that add non-displayed liquidity to the Exchange, as this is the
same as the standard pricing that is currently applicable to such
executions for all Members.
The Exchange believes that the proposed change to modify the
required criteria under Liquidity Provision Tier 3 is reasonable
because, as noted above, such change would keep the existing ADAV
threshold intact and also provide two additional alternative volume
thresholds that a Member may choose to achieve that are based on
different types of volume, which would incentivize the submission of
different types of order flow, thereby contributing to a more robust
and well-balanced market ecosystem on the Exchange to the benefit of
all Members. The Exchange also believes the proposed new criteria are
equitable and not unfairly discriminatory because all Members will
continue to be eligible to meet such criteria, including the Members
that currently meet the existing ADAV threshold that is not changing.
Further, as noted above, while the Exchange has no way of predicting
with certainty how the proposed new criteria will impact Member
activity, the Exchange expects that more Members will be able to
qualify for such tier under the proposed new criteria, which is more
expansive.
The Exchange believes that the proposed reduced standard rebate
provided for executions of Added Displayed Volume (i.e., $0.0020 per
share) is reasonable because the Exchange believes it represents only a
modest decrease (i.e., $0.0002 per share) from the current standard
rebate provided for executions of Added Displayed Volume (i.e., $0.0022
per share) and, as noted above, it remains in line with, or higher
than, the standard rebates provided by other exchanges for
[[Page 14929]]
executions of orders in securities priced at or above $1.00 per share
that add displayed liquidity.\39\
---------------------------------------------------------------------------
\39\ See supra note 25.
---------------------------------------------------------------------------
Similarly, Exchange believes that the proposed reduced standard
rebate provided for executions of Added Displayed Retail Volume (i.e.,
$0.0035 per share) is reasonable because the Exchange believes it
represents only a modest decrease (i.e., $0.0002 per share) from the
current standard rebate provided for executions of Added Displayed
Retail Volume (i.e., $0.0037 per share) and, as noted above, it remains
higher than, and competitive with, the standard rebates provided by
other exchanges for executions of attested retail orders in securities
priced at or above $1.00 per share that add displayed liquidity.\40\
---------------------------------------------------------------------------
\40\ See supra note 27.
---------------------------------------------------------------------------
The Exchange also believes that the proposed increased standard fee
charged for executions of Removed Volume (i.e., $0.0030 per share) is
reasonable because the Exchange believes it represents only a modest
increase (i.e., $0.0001 per share) from the current standard fee
charged for executions of Removed Volume (i.e., $0.0029 per share) and,
as noted above, it remains in line with the standard fees charged by
other exchanges for executions of orders in securities priced at or
above $1.00 per share that remove liquidity.\41\
---------------------------------------------------------------------------
\41\ See supra note 29.
---------------------------------------------------------------------------
The Exchange believes the proposed changes to reduce the standard
rebate for executions of Added Displayed Volume, reduce the standard
rebate for executions of Added Displayed Retail Volume, and increase
the standard fee for executions of Removed Volume are reasonable
because, as noted above, the Exchange believes such changes would act
together to decrease the Exchange's expenditures and generate
additional revenue with respect to its transaction pricing in a manner
that is still consistent with the Exchange's overall pricing philosophy
of encouraging added displayed liquidity. The Exchange also believes
that the proposed changes to these standard rates represents an
equitable allocation of fees and are not unfairly discriminatory
because such standard rates will continue to apply equally to all
Members.
The Exchange believes that the proposed increased fee charged for
executions of Removed Volume under Liquidity Removal Tier 1 (i.e.,
$0.00285 per share) is reasonable because the Exchange believes it
represents only a modest increase (i.e., $0.00005 per share) from the
current fee charged for executions of Removed Volume under Liquidity
Removal Tier 1 (i.e., $0.0028 per share), and the Exchange is also
proposing to lower both of the volume thresholds under such tier such
that each threshold would be easier to achieve. Thus, while the
Exchange is modestly increasing the fee under such tier, as noted
above, it expects that more Members will strive to qualify for such
tier due to the proposed lower criteria and, in turn, receive the
corresponding discounted fee for executions of Removed Volume. The
Exchange also believes this proposed change is reasonable, as it
believes the proposed increased fee continues to be commensurate with
the proposed lower criteria. The Exchange also believes the proposed
increased fee and new criteria are equitable and not unfairly
discriminatory because all Members will continue to be eligible to meet
such criteria and qualify for Liquidity Removal Tier 1, and therefore,
have the opportunity to pay a discounted fee for executions of Removed
Volume.
The Exchange believes the proposed rule changes to eliminate the
DLI Additive Rebate for DLI Tier 2 and the Targeted Step-Up Tier are
reasonable because the Exchange is not required to maintain such
incentives or provide Members any opportunities to receive additive
rebates. The Exchange believes the proposal to eliminate such
incentives is also equitable and not unfairly discriminatory because it
applies equally to all Members (i.e., the incentives will not be
available for any Member). As noted above, neither of these incentives
has achieved the level of participation the Exchange expected, and
thus, such incentives are not accomplishing the goals that the Exchange
had when initially adopting them. As the additional rebates offered
under these incentives are not affecting Members' behavior in the
manner originally conceived by the Exchange in that there are lower-
than-expected levels of participation, the Exchange does not believe
the proposed elimination of such incentives will have a significant
impact on any Member's trading behavior on the Exchange. Furthermore,
the proposed rule change to eliminate both the DLI Additive Rebate for
DLI Tier 2 and the Targeted Step-Up Tier enables the Exchange to
redirect resources and funding into other pricing incentives and tiers
intended to incentivize increased order flow and enhance market quality
for all Members.
For the reasons discussed above, the Exchange submits that the
proposal satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of
the Act \42\ in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its Members and other
persons using its facilities and is not designed to unfairly
discriminate between customers, issuers, brokers, or dealers. As
described more fully below in the Exchange's statement regarding the
burden on competition, the Exchange believes that its transaction
pricing is subject to significant competitive forces, and that the
proposed fees and rebates described herein are appropriate to address
such forces.
---------------------------------------------------------------------------
\42\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal will result in any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Instead, as discussed above,
the proposal is intended to decrease the Exchange's expenditures and
generate additional revenue with respect to its transaction pricing, as
well as to incentivize market participants to direct additional
aggressively priced liquidity and more diverse types of order flow to
the Exchange, thereby deepening liquidity and promoting market quality
on the Exchange to the benefit of all market participants. As a result,
the Exchange believes the proposal would enhance its competitiveness as
a market that attracts actionable orders, thereby making it a more
desirable destination venue for its customers. For these reasons, the
Exchange believes that the proposal furthers the Commission's goal in
adopting Regulation NMS of fostering competition among orders, which
promotes ``more efficient pricing of individual stocks for all types of
orders, large and small.'' \43\
---------------------------------------------------------------------------
\43\ See supra note 25.
---------------------------------------------------------------------------
Intramarket Competition
As discussed above, the Exchange believes that the proposal would
incentivize Members to submit additional aggressively priced displayed
liquidity (including liquidity that establishes the NBBO) to the
Exchange, and to maintain or increase their order flow on the Exchange
generally, thereby contributing to a deeper and more liquid market and
promoting price discovery and market quality on the Exchange to the
benefit of all market participants and enhancing the attractiveness of
the Exchange as a trading venue, which the Exchange believes, in turn,
would continue to encourage market
[[Page 14930]]
participants to direct additional order flow to the Exchange. Greater
liquidity benefits all Members by providing more trading opportunities
and encourages Members to send additional orders to the Exchange,
thereby contributing to robust levels of liquidity, which benefits all
market participants. The opportunity to qualify for the proposed new
NBBO Setter Tier and Non-Display Add Volume Tiers, and thus receive the
proposed additive rebate for executions of Setter Volume or the
proposed enhanced rebates for executions of Added Non-Displayed Volume,
respectively, would be available to all Members that meet the
associated volume requirements in any month. Similarly, as described
above, Liquidity Provision Tier 3 and Liquidity Removal Tier 1 continue
to be available to all Members that meet the associated volume criteria
and, as noted above, the proposed new volume criteria under Liquidity
Provision Tier 3 and Liquidity Removal Tier 1 include more expansive or
lower volume thresholds, respectively, which the Exchange believes
would enable more Members to possibly qualify for such tiers without
impacting the ability of Members that currently qualify to continue to
do so, and the Exchange believes the respective enhanced rebate and
discounted fee provided under such tiers are reasonably related to the
enhanced market quality that such tiers are designed to promote.
Additionally, as noted above, the proposed reduced standard rebates for
executions of Added Displayed Volume and Added Displayed Retail Volume,
as well as the proposed increased standard fees for executions of Added
Midpoint Volume, Add Non-Midpoint Hidden Volume and Removed Volume,
would continue to apply equally to all Members in the same manner that
such standard rates currently do today. Lastly, the Exchange does not
believe the proposed changes to eliminate the DLI Additive Rebate for
DLI Tier 2 and the Targeted Step-Up Tier will impose any burden on
intramarket competition because such changes will apply to all Members
uniformly, as in, such incentives will no longer be available to any
Member, and, as described above, the Exchange does not believe the
proposed elimination of such incentives will have a significant impact
on any Member's trading behavior on the Exchange. For the foregoing
reasons, the Exchange believes the proposed changes would not impose
any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
Intermarket Competition
As noted above, the Exchange operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. Members have numerous
alternative venues that they may participate on and direct their order
flow to, including 15 other equities exchanges and numerous alternative
trading systems and other off-exchange venues. As noted above, no
single registered equities exchange currently has more than
approximately 16.5% of the total market share of executed volume of
equities trading. Thus, in such a low-concentrated and highly
competitive market, no single equities exchange possesses significant
pricing power in the execution of order flow. Moreover, the Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow or discontinue to reduce use of certain categories of products, in
response to new or different pricing structures being introduced into
the market. Accordingly, competitive forces constrain the Exchange's
transaction fees and rebates, including with respect to executions of
Added Displayed Volume, Added Displayed Retail Volume, Added Midpoint
Volume, Added Non-Midpoint Hidden Volume, Removed Volume, and Setter
Volume, and market participants can readily choose to send their orders
to other exchange and off-exchange venues if they deem fee levels at
those other venues to be more favorable. As described above, the
proposed change is a competitive proposal through which the Exchange is
seeking to decrease the Exchange's expenditures and generate additional
revenue with respect to its transaction pricing and to encourage
additional order flow to the Exchange through volume-based incentives
and discounts, which have been widely adopted by exchanges, and
standard pricing that is comparable to, and/or competitive with,
pricing for similar executions in place at other exchanges.\44\
Accordingly, the Exchange believes the proposal would not burden, but
rather promote, intermarket competition by enabling it to better
compete with other exchanges that offer similar standard pricing for
executions of Added Displayed Volume, Added Displayed Retail Volume,
Added Midpoint Volume, Added Non-Midpoint Hidden Volume, and Removed
Volume, as well as similar pricing incentives and discounts to market
participants that achieve certain volume criteria and thresholds.
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\44\ See supra notes 12, 16, 17, 21, 25, 27 and 29.
---------------------------------------------------------------------------
Additionally, the Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues and, also, recognized
that current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \45\ The fact
that this market is competitive has also long been recognized by the
courts. In NetCoalition v. SEC, the D.C. Circuit stated as follows:
``[n]o one disputes that competition for order flow is `fierce.' . . .
As the SEC explained, `[i]n the U.S. national market system, buyers and
sellers of securities, and the broker-dealers that act as their order-
routing agents, have a wide range of choices of where to route orders
for execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .''.\46\ Accordingly, the Exchange does not believe its
proposed pricing changes impose any burden on competition that is not
necessary or appropriate in furtherance of the purposes of the Act.
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\45\ See supra note 36.
\46\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSE-2006-21)).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
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 \47\ and Rule 19b-4(f)(2) \48\ thereunder.
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\47\ 15 U.S.C. 78s(b)(3)(A)(ii).
\48\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if
[[Page 14931]]
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 change should be approved or
disapproved.
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-MEMX-2022-01 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-MEMX-2022-01. 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-MEMX-2022-01 and should be submitted on
or before April> 6, 2022.
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\49\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\49\
Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2022-05483 Filed 3-15-22; 8:45 am]
BILLING CODE 8011-01-P