[Federal Register Volume 88, Number 136 (Tuesday, July 18, 2023)]
[Notices]
[Pages 45941-45943]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15126]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97883; File No. SR-MIAX-2023-26]


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

July 12, 2023.
    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on June 28, 2023, Miami International Securities 
Exchange, LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') a proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the Exchange. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX Fee Schedule 
(``Fee Schedule'') to extend the SPIKES Options Market Maker Incentive 
Program (the ``Incentive Program'') until December 31, 2023.
    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/miax-options/rule-filings, at MIAX's principal office, and at the Commission's 
Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Fee Schedule to extend the 
Incentive Program until December 31, 2023.
    On September 30, 2021, the Exchange filed its initial proposal to 
implement a SPIKES Options Market Maker Incentive Program for SPIKES 
options to incentivize Market Makers \3\ to improve liquidity, 
available volume, and the quote spread width of SPIKES options 
beginning October 1, 2021, and ending December 31, 2021.\4\ Technical 
details regarding the Incentive Program were published in a Regulatory 
Circular on September 30, 2021.\5\ On October 12, 2021, the Exchange 
withdrew SR-MIAX-2021-45 and refiled its proposal to implement the 
Incentive Program to provide additional details.\6\ In that filing, the 
Exchange specifically noted that the Incentive Program would expire at 
the end of the period (December 31, 2021) unless the Exchange filed 
another 19b-4 Filing to amend the fees (or extend the Incentive 
Program).\7\
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    \3\ The term ``Market Makers'' refers to ``Lead Market Makers'', 
``Primary Lead Market Makers'' and ``Registered Market Makers'' 
collectively. See Exchange Rule 100.
    \4\ See SR-MIAX-2021-45.
    \5\ See MIAX Options Regulatory Circular 2021-56, SPIKES Options 
Market Maker Incentive Program (September 30, 2021) available at 
https://www.miaxglobal.com/sites/default/files/circular-files/MIAX_Options_RC_2021_56.pdf.
    \6\ See Securities Exchange Act Release No. 93424 (October 26, 
2021), 86 FR 60322 (November 1, 2021) (SR-MIAX-2021-49).
    \7\ See id.
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    Between December 23, 2021 and March 22, 2023, the Exchange filed 
several proposals to extend the Incentive Program, with the last 
extension period ending June 30, 2023.\8\ In each of those filings, the 
Exchange specifically noted that the Incentive Program would expire at 
the end of the then-current period unless the Exchange filed another 
19b-4 Filing to amend the fees (or extend the Incentive Program).\9\ 
The Exchange now proposes to extend the Incentive Program until 
December 31, 2023.\10\
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    \8\ See Securities Exchange Act Release Nos. 93881 (December 30, 
2021), 87 FR 517 (January 5, 2022) (SR-MIAX-2021-63); 94574 (April 
1, 2022), 87 FR 20492 (April 7, 2022) (SR-MIAX-2022-12); 95259 (July 
12, 2022), 87 FR 42754 (July 17, 2022) (SR-MIAX-2022-24); 96007 
(October 7, 2022), 87 FR 62151 (October 13, 2022) (SR-MIAX-2022-32); 
96007 (October 7, 2022), 87 FR 62151 (October 13, 2022) (SR-MIAX-
2022-32); 96588 (December 28, 2022), 88 FR 381 (January 4, 2023) 
(SR-MIAX-2022-47); 97239 (April 3, 2023), 88 FR 20930 (April 7, 
2023) (SR-MIAX-2023-13).
    \9\ See id.
    \10\ The Exchange notes that at the end of the extension period, 
the Incentive Program will expire unless the Exchange files another 
19b-4 Filing to amend the terms or extend the Incentive Program.
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    The Exchange proposes to extend the Incentive Program for SPIKES 
options to continue to incentivize Market Makers to improve liquidity, 
available volume, and the quote spread width of SPIKES options. 
Currently, to be eligible to participate in the Incentive Program, a 
Market Maker must meet certain minimum requirements related to quote 
spread width in certain in-the-money (ITM) and out-of-the-money (OTM) 
options as determined by the Exchange and communicated to Members via 
Regulatory Circular.\11\ Market Makers must also satisfy a minimum time 
in the market in the front 2 expiry months of 70%, and have an average 
quote size of 25 contracts. The Exchange established two separate 
incentive compensation pools that are used to compensate Market Makers 
that satisfy the criteria pursuant to the Incentive Program.
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    \11\ See supra note 5.
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    The first pool (Incentive 1) has a total amount of $40,000 per 
month, which is allocated to Market Makers that meet the minimum 
requirements of the Incentive Program. Market Makers are required to 
meet minimum spread

[[Page 45942]]

width requirements in a select number of ITM and OTM SPIKES option 
contracts as determined by the Exchange and communicated to Members via 
Regulatory Circular.\12\ A complete description of how the Exchange 
calculates the minimum spread width requirements in ITM and OTM SPIKES 
options can be found in the published Regulatory Circular.\13\ Market 
Makers are also required to maintain the minimum spread width, 
described above, for at least 70% of the time in the front two (2) 
SPIKES options contract expiry months and maintain an average quote 
size of at least 25 SPIKES options contracts. The amount available to 
each individual Market Maker is capped at $10,000 per month for 
satisfying the minimum requirements of the Incentive Program. In the 
event that more than four Market Makers meet the requirements of the 
Incentive Program, each qualifying Market Maker is entitled to receive 
a pro-rated share of the $40,000 monthly compensation pool dependent 
upon the number of qualifying Market Makers in that particular month.
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    \12\ See id.
    \13\ See id.
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    The second pool (Incentive 2 Pool) is capped at a total amount of 
$100,000 per month which is used during the Incentive Program to 
further incentivize Market Makers who meet or exceed the requirements 
of Incentive 1 (``qualifying Market Makers'') to provide tighter quote 
width spreads. The Exchange ranks each qualifying Market Maker's quote 
width spread relative to each other qualifying Market Maker's quote 
width spread. Market Makers with tighter spreads in certain strikes, as 
determined by the Exchange and communicated to Members via Regulatory 
Circular,\14\ are eligible to receive a pro-rated share of the 
compensation pool as calculated by the Exchange and communicated to 
Members via Regulatory Circular,\15\ not to exceed $25,000 per Member 
per month. Qualifying Market Makers are ranked relative to each other 
based on the quality of their spread width (i.e., tighter spreads are 
ranked higher than wider spreads) and the Market Maker with the best 
quality spread width receives the highest rebate, while other eligible 
qualifying Market Makers receive a rebate relative to their quality 
spread width.
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    \14\ See id.
    \15\ See id.
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    The Exchange proposes to extend the Incentive Program until 
December 31, 2023. The Exchange does not propose to make any amendments 
to how it calculates any of the incentives provided for in Incentive 
Pools 1 or 2. The details of the Incentive Program can continue to be 
found in the Regulatory Circular that was published on September 30, 
2021 to all Exchange Members.\16\ The purpose of this extension is to 
continue to incentivize Market Makers to improve liquidity, available 
volume, and the quote spread width of SPIKES options. The Exchange will 
announce the extension of the Incentive Program to all Members via a 
Regulatory Circular.
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    \16\ See id.
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \17\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \18\ in 
particular, in that it is an equitable allocation of reasonable fees 
and other charges among its members and issuers and other persons using 
its facilities. The Exchange also believes the proposal furthers the 
objectives of Section 6(b)(5) of the Act in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest and is not designed to permit unfair discrimination between 
customers, issuers, brokers and dealers.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to extend the Incentive Program for Market 
Makers in SPIKES options until December 31, 2023. The Incentive Program 
is reasonably designed because it will continue to incentivize Market 
Makers to provide quotes and increased liquidity in select SPIKES 
options contracts. The Incentive Program is reasonable, equitably 
allocated and not unfairly discriminatory because all Market Makers in 
SPIKES options may continue to qualify for Incentive 1 and Incentive 2, 
dependent upon each Market Maker's quoting in SPIKES options in a 
particular month. Additionally, if a SPIKES Market Maker does not 
satisfy the requirements of Incentive Pool 1 or 2, then it simply will 
not receive the rebate offered by the Incentive Program for that month.
    The Exchange believes that it is reasonable, equitable and not 
unfairly discriminatory to continue to offer this financial incentive 
to SPIKES Market Makers because it will continue to benefit all market 
participants trading in SPIKES options. SPIKES options is a Proprietary 
Product on the Exchange and the continuation of the Incentive Program 
encourages SPIKES Market Makers to satisfy a heightened quoting 
standard, average quote size, and time in market. A continued increase 
in quoting activity and tighter quotes may yield a corresponding 
increase in order flow from other market participants, which benefits 
all investors by deepening the Exchange's liquidity pool, potentially 
providing greater execution incentives and opportunities, while 
promoting market transparency and improving investor protection.
    The Exchange believes that the Incentive Program is equitable and 
not unfairly discriminatory because it will continue to promote an 
increase in SPIKES options liquidity, which may facilitate tighter 
spreads and an increase in trading opportunities to the benefit of all 
market participants. The Exchange believes it is reasonable to operate 
the Incentive Program for a continued limited period of time to 
strengthen market quality for all market participants. The resulting 
increased volume and liquidity will benefit those Members who are 
eligible to participate in the Incentive Program and will also continue 
to benefit those Members who are not eligible to participate in the 
Incentive Program by providing more trading opportunities and tighter 
spreads.

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.
Intra-Market Competition
    The Exchange believes that the proposed extension of the Incentive 
Program to December 31, 2023 would continue to increase intra-market 
competition by incentivizing Market Makers to quote SPIKES options, 
which will continue to enhance the quality of quoting and increase the 
volume of contracts available to trade in SPIKES options. To the extent 
that this purpose is achieved, all the Exchange's market participants 
should benefit from the improved market liquidity for SPIKES options. 
Enhanced market quality and increased transaction volume in SPIKES 
options that results from the anticipated increase in Market Maker 
activity on the Exchange will benefit all market participants and 
improve competition on the Exchange.

[[Page 45943]]

Inter-Market Competition
    The Exchange does not believe that the proposed rule changes will 
impose any burden on inter-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
proposed extension of the Incentive Program applies only to the Market 
Makers in SPIKES Options, which are traded exclusively on the Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\19\ and Rule 19b-4(f)(2) \20\ thereunder. 
At any time within 60 days of the filing of the proposed rule change, 
the Commission summarily may temporarily suspend such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MIAX-2023-26 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-MIAX-2023-26. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-MIAX-2023-26 and should be 
submitted on or before August 8, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-15126 Filed 7-17-23; 8:45 am]
BILLING CODE 8011-01-P