[Federal Register Volume 87, Number 233 (Tuesday, December 6, 2022)]
[Notices]
[Pages 74691-74693]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-26444]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96414; File No. SR-MEMX-2022-31]


Self-Regulatory Organizations; MEMX LLC; Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Fee Schedule

November 30, 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 November 17, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing 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 November 17, 2022. The text of the proposed rule 
change is provided in Exhibit 5.
---------------------------------------------------------------------------

    \3\ See Exchange Rule 1.5(p).
---------------------------------------------------------------------------

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 exclude any day with a scheduled early market close from 
the volume calculations used by the Exchange for purposes of 
determining a Member's qualification for the Exchange's transaction 
pricing tiers. Specifically, the Exchange proposes to exclude any day 
with a scheduled early market close from its calculations of ADAV,\4\ 
ADV \5\ and TCV,\6\ and for purposes of determining qualification for 
the Displayed Liquidity Incentive.
---------------------------------------------------------------------------

    \4\ As set forth on the Fee Schedule, ``ADAV'' means average 
daily added volume calculated as the number of shares added per day, 
which is calculated on a monthly basis.
    \5\ As set forth on the Fee Schedule, ``ADV'' means average 
daily volume calculated as the number of shares added or removed, 
combined, per day, which is calculated on a monthly basis.
    \6\ 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.
---------------------------------------------------------------------------

    Currently, the Exchange's Fee Schedule provides that the Exchange 
excludes from its calculations of ADAV, ADV and TCV, and for purposes 
of determining qualification for the Displayed Liquidity Incentive: (1) 
any trading day that the Exchange's system experiences a disruption 
that lasts for more than 60 minutes during regular trading hours; (2) 
the day that Russell Investments reconstitutes its family of indexes 
(i.e., the last Friday in June); (3) any day that the MSCI Equities 
Indexes are rebalanced (i.e., on a quarterly basis); and (4) any day 
that the S&P 400, S&P 500, and S&P 600 Indexes are rebalanced (i.e., on 
a quarterly basis).
    The Exchange excludes these days from such calculations in order to 
avoid penalizing Members that might otherwise qualify for certain 
tiered pricing but that, because of special circumstances on a 
particular day, did not participate on the Exchange to the extent that 
they might have otherwise participated. Similarly, the Exchange 
believes that scheduled early market closes, which typically are the 
day before or after a holiday, may preclude some Members from 
submitting orders to the Exchange at the same level as they might 
otherwise. The Exchange notes that it is not proposing to modify any of 
the existing fees or rebates or the volume thresholds at which a Member 
may qualify for certain fees or rebates pursuant to its tiered pricing 
structure. Rather, as noted above, the Exchange is proposing to modify 
its Fee Schedule by including in the list of days excluded from its 
calculations of ADAV, ADV and TCV, and for purposes of determining 
qualification for the Displayed Liquidity Incentive, any day with a 
scheduled early market close.
    The Exchange believes that excluding days with a scheduled early 
market close from its calculations of ADAV, ADV and TCV, and for 
purposes of determining qualification for the Displayed Liquidity 
Incentive, will provide Members with increased certainty as to their 
monthly cost for trades executed on the Exchange. In addition, the 
Exchange notes that excluding days with a scheduled early market close 
from volume calculations for purposes of determining a Member's 
qualification for pricing tiers is consistent with the practice of 
other exchanges.\7\
---------------------------------------------------------------------------

    \7\ See, e.g., Cboe BZX Exchange, Inc. equities trading fee 
schedule on its public website (available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/); see also 
Securities Exchange Act Release No. 72589 (July 10, 2014), 79 FR 
41618 (July 16, 2014) (SR-BATS-2014-025).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 74692]]

the provisions of Section 6 of the Act,\8\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\9\ 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.
---------------------------------------------------------------------------

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

    The Exchange believes the proposed change to exclude any day with a 
scheduled early market close from the volume calculations used by the 
Exchange for purposes of determining a Member's qualification for the 
Exchange's transaction pricing tiers is reasonable because, as 
described above, it will help provide Members with a greater level of 
certainty as to their level of rebates and costs for trading in any 
month where there is a scheduled early market close. The Exchange is 
not proposing to amend the thresholds a Member must achieve to become 
eligible for, or the dollar value associated with, the tiered rebates 
or fees. Eliminating the inclusion of any day with a scheduled early 
market close would, in many cases, be excluding a day that would 
otherwise lower a Member's ADAV and/or ADV as a percentage of the TCV, 
as well as negatively impact a Member's average quoting activity for 
purposes of the Displayed Liquidity Incentive Tiers. Thus, the Exchange 
believes the proposed change will make the majority of Members more 
likely to meet the minimum or higher tier thresholds, incentivizing 
Members to increase their participation on the Exchange in order to 
meet the next highest tier. Additionally, the Exchange believes that 
the proposed rule change is equitable and not unfairly discriminatory 
because the methodology for calculating ADAV, ADV and TCV, and for 
purposes of determining qualification for the Displayed Liquidity 
Incentive, will apply equally to all Members, in that each Member's 
volume and quoting activities for purposes of the Exchange's 
transaction pricing tiers would continue to be calculated in a uniform 
manner and would now exclude any day with a scheduled early market 
close. Further, the Exchange believes that a tiered pricing model not 
significantly altered by a day of atypical trading behavior, which 
allows Members to predictably calculate their costs associated with 
trading activity on the Exchange, is reasonable, fair and equitable and 
not unreasonably discriminatory, as it is uniform in application 
amongst Members and should enable such participants to operate their 
business without concern of unpredictable and potentially significant 
changes in expenses.
    In addition, as noted above, the proposed exclusion of any day with 
a scheduled early market close from volume calculations for purposes of 
determining a Member's qualification for pricing tiers is consistent 
with the practice of other exchanges, and therefore, such proposal does 
not raise any new or novel issues that have not previously been 
considered by the Commission.\10\
---------------------------------------------------------------------------

    \10\ See supra note 7.
---------------------------------------------------------------------------

    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 \11\ 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.
---------------------------------------------------------------------------

    \11\ 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. Rather, the Exchange believes 
the proposed change will help to promote intramarket competition by 
avoiding a penalty to Members for days when overall trading activity 
might be significantly lower than a typical trading day. Additionally, 
the Exchange believes the proposal would not impose any burden on 
intramarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act because, as described above, the 
proposed exclusion of any day with a scheduled early market close from 
the relevant calculations will apply equally to all Members and in the 
same manner that the Exchange currently excludes certain system 
disruption and index rebalance days from such calculations. The 
Exchange does not believe the proposal would impose any burden on 
intermarket competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as the Exchange believes the 
proposal is not concerned with such competitive issues, but rather 
relates to calculation methodologies applicable to its pricing tiers.

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

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 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 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-2022-31 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-2022-31. 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

[[Page 74693]]

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-2022-31 and should be submitted on 
or before December 27, 2022.

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

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

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-26444 Filed 12-5-22; 8:45 am]
BILLING CODE 8011-01-P