[Federal Register Volume 89, Number 5 (Monday, January 8, 2024)]
[Notices]
[Pages 972-975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-00079]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99261; File No. SR-MEMX-2023-42]


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

January 2, 2024.
    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 December 28, 2023, 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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[[Page 973]]

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 (the ``Fee Schedule'') pursuant to 
Exchange Rules 15.1(a) and (c). The Exchange proposes to extend the 
waiver (the ``Membership Fee Waiver'') of membership fees (``Membership 
Fees'') which is currently in place for all new Members \3\ of the 
Exchange, for an additional month beyond the program's current 
expiration on December 31, 2023. The Exchange will continue to waive 
Membership Fees for new Members who join the Exchange through January 
31, 2024. 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 Exchange proposes to extend the time period for the waiver of 
Membership Fees until January 31, 2024. The Exchange will continue to 
implement the Membership Fee Waiver (as defined above) for all new 
Members who join the Exchange prior to and including January 31, 2024. 
The Exchange notes that the proposed change does not amend any existing 
fee or rebate for equities transactions, market data or connectivity 
fees. The sole change proposed herein is to extend the timeframe during 
which the Exchange will waive Membership Fees for new Members of the 
Exchange.
    Currently, MEMX applies a Membership Fee Waiver to all new Members 
of the Exchange which is set to expire on December 31, 2023. Under the 
current Membership Fee Waiver, new Members who join the Exchange after 
December 31, 2023, would be assessed Membership Fees of $200 per month 
to maintain active membership, and new Members whose Membership Fees 
were waived during the Waiver Period would be assessed Membership Fees 
of $200 per month beginning January 1, 2024. In addition, in September 
of 2023 the Exchange adopted specific fees applicable to participation 
on the Exchange's platform for trading equity options (``MEMX 
Options'').\4\ The current Membership Fee Waiver has also been applied 
to new Members of MEMX Options, and thus such fees have not been 
imposed on such Members to date.
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    \4\ See Securities Exchange Act Release No. 98648 (September 29, 
2023), 88 FR 68762 (October 4, 2023) (SR-MEMX-2023-26).
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    The Exchange believes that the existing Membership Fee Waiver has 
been effective in incentivizing options market participants to join 
MEMX Options. MEMX Options launched in September of 2023, and has been 
conducting a staged rollout of options available for trading on the 
Exchange since that time. The Exchange believes that its rollout will 
be complete in January of 2024 and would like to extend the Membership 
Fee Waiver until after its rollout is complete in the event there are 
options firms that are waiting to join the Exchange until after such 
rollout is complete. In addition, the Exchange believes the Membership 
Fee Waiver is a proper incentive for new participants on MEMX Options 
to continue to increase their participation as they become accustomed 
to the new trading platform.
    Accordingly, the Exchange proposes to extend the time period of the 
Membership Fee Waiver to expire on January 31, 2024. The Exchange 
proposes to continue to waive Membership Fees for all new Members who 
join the exchange on or before January 31, 2024. Under the proposed 
Membership Fee Waiver, new Members who join the Exchange after January 
31, 2024, will be assessed Membership Fees to maintain active 
membership and if applicable, Members who participate on MEMX Options 
will be assessed the specific Additional Fees applicable to such 
participation. Similarly, new Members whose Membership Fees have been 
waived since joining the Exchange will be assessed Membership Fees, 
including Additional Fees applicable to participation on MEMX Options, 
if applicable, beginning February 1, 2024. In addition, new Members of 
MEMX Options who join after January 31, 2024, will be assessed 
Membership Fees of $200 per month to maintain active membership, and 
new Members whose Membership Fees were waived will be assessed 
Membership Fees of $200 per month beginning February 1, 2024. 
Specifically, the Exchange is proposing to amend the description under 
``Membership'' in the Exchange's Fee Schedule, noting that Membership 
Fees will be waived for new Members of the Exchange until February 1, 
2024.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and 
furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 
in particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using its facilities and does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes it is reasonable to extend the timeframe of 
the Membership Fee Waiver for new Members of the Exchange, primarily to 
continue to provide an incentive for options trading firms to continue 
to apply for Exchange membership during the current phase of the 
rollout of MEMX Options. The options markets are quote-driven markets 
and are dependent on liquidity providers for liquidity and price 
discovery. Extending the timeframe of the Membership Fee Waiver will 
continue to encourage additional liquidity providers to become members 
of the Exchange, which may result in more trading opportunities, 
enhanced competition, and improved overall market quality on the 
Exchange. Although the proposed extension of the Membership Fee Waiver 
timeframe is intended primarily to encourage new participants to join 
the Exchange in order to participate on the MEMX Options market and the 
Exchange believes the participants that will benefit from this waiver 
are firms that will do so, the Exchange also believes that it is 
reasonable to continue applying the Membership Fee Waiver broadly to 
all new participants on the Exchange during the timeframe extension, 
including firms that would trade only on the Exchange's market for 
equity securities or on both the Exchange's market for equity 
securities and MEMX Options.
    In addition, the Exchange believes that the proposed extension of 
the Membership Fee Waiver is equitable and not unfairly discriminatory 
in that it will apply uniformly to all new

[[Page 974]]

Members of the Exchange. Further, the Exchange believes that the 
proposed extension of the waiver is reasonable, equitable and not 
unfairly discriminatory to current Members of the Exchange because the 
majority of the Exchange's existing Members joined at a time when the 
Exchange did not impose membership fees (also to incentivize such 
participants to join), and thus have already received this benefit.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change 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 Exchange believes that the proposed change would 
encourage market participants who have not already done so to join the 
Exchange. As a result, if such participants do join the Exchange and 
route their orders to the Exchange or support other Members that route 
orders (i.e., clearing firms) the Exchange believes the proposal would 
further enhance its competitiveness as a market. Encouraging additional 
participants to join the Exchange will enable a greater number of 
participants to participate on MEMX Options during the continued 
rollout of the platform. Further, the Exchange believes that by 
continuing to make the Membership Fee Waiver applicable to both the 
Exchange's options platform and the Exchange's equity platform for an 
extended time period, the proposal will enhance the competitiveness of 
both platforms. Attracting a greater number of participants will foster 
greater competition on the Exchange, particularly in the case of MEMX 
Options which is a quote-driven market. 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.'' \7\
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    \7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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Intramarket Competition
    As discussed above, the Exchange believes that the proposal would 
encourage new participants to apply for Exchange membership, thereby 
enhancing liquidity and market quality on the Exchange, as well as 
enhancing the attractiveness of the Exchange as a trading venue, which 
the Exchange believes, in turn, would continue to encourage market 
participants to direct additional order flow to the Exchange.
    The Exchange does not believe that the proposed changes would 
impose any burden on intramarket competition because such changes will 
incentivize new participants to join the Exchange and the majority of 
the Exchange's current members joined at a time when the Exchange did 
not impose membership fees (also to incentivize such participants to 
join), and thus have already received this benefit. The options markets 
are quote-driven markets and are dependent on liquidity providers for 
liquidity and price discovery. The proposal will be of particular 
importance in encouraging additional liquidity providers to become 
members of the Exchange, which may result in more trading 
opportunities, enhanced competition, and improved overall market 
quality 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 described above, the proposed extension of the Membership Fee 
Waiver timeframe will incent market participants to join the Exchange 
during the extended Membership Fee Waiver period. Accordingly, the 
Exchange believes the proposal would not burden, but rather promote, 
intermarket competition by enabling it to better compete with other 
options exchanges during the continued rollout of MEMX Options. In 
addition, as noted above, the Exchange has intentionally proposed to 
apply the waiver broadly so that it continues to be applicable to new 
Members that will participate on the Exchange's market for equity 
securities or that will participate on such market as well as MEMX 
Options, and thus, the proposal may also better enable the Exchange to 
compete with other options exchanges and equities exchanges.

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 \8\ and Rule 19b-4(f)(2) \9\ thereunder.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. 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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MEMX-2023-42 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-2023-42. 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

[[Page 975]]

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-MEMX-2023-42 
and should be submitted on or before January 29, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-00079 Filed 1-5-24; 8:45 am]
BILLING CODE 8011-01-P