[Federal Register Volume 89, Number 39 (Tuesday, February 27, 2024)]
[Notices]
[Pages 14547-14550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03904]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99581; File No. SR-MEMX-2024-05]


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

February 21, 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 February 8, 2024, 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

    (a) 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: 
(i) extend the waiver (``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 January 31, 2024; and (ii) extend the waiver of 
Connectivity and Application Session Fees solely related to 
participation on the Exchange's platform for trading equity options on 
MEMX Options (``Options Connectivity Fee Waiver''), which is currently 
in place for all new Members and non-Members \4\ of the Exchange, for 
an additional month beyond the program's current expiration on January 
31, 2024. The Exchange will continue to implement both the Membership 
Fee Waiver (as defined above) for all new Members who join the Exchange 
and the Options Connectivity Fee Waiver (as defined above) for all 
Members and non-Members of the Exchange prior to and including February 
29, 2024. The text of the proposed rule change is provided in Exhibit 
5.
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    \3\ See Exchange Rule 1.5(p).
    \4\ Types of market participants that obtain connectivity 
services from the Exchange but are not Members include service 
bureaus and extranets. Service bureaus offer technology-based 
services to other companies for a fee, including order entry 
services to Members, and thus, may access application sessions on 
behalf of one or more Members. Extranets offer physical connectivity 
services to Members and non-Members.
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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) extend the waiver (``Membership Fee Waiver'') of 
membership fees (``Membership Fees'') which is currently in place for 
all new Members \5\ of the Exchange, for an additional month beyond the 
program's current expiration on January 31, 2024; and (ii) extend the 
waiver of Connectivity and Application Session Fees solely related to 
participation on the Exchange's platform for trading equity options on 
MEMX Options (``Options Connectivity Fee Waiver''), which is currently 
in place for all new Members and non-Members \6\ of the Exchange, for 
an additional month beyond the program's current expiration on January 
31, 2024.\7\ The Exchange will continue to implement both the 
Membership Fee Waiver (as defined above) for all new Members who join 
the Exchange and the Options Connectivity Fee Waiver (as defined above) 
for all Members and non-Members of the Exchange prior to and including 
February 29, 2024. The Exchange notes that the proposed change does not 
amend any existing fee or rebate for equities or options transactions, 
market data or connectivity fees. The sole change proposed herein is to 
extend the timeframe during which the Exchange will waive Membership 
Fees and Options Connectivity Fees for new Members and non-Members of 
the Exchange.
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    \5\ See Exchange Rule 1.5(p).
    \6\ Types of market participants that obtain connectivity 
services from the Exchange but are not Members include service 
bureaus and extranets. Service bureaus offer technology-based 
services to other companies for a fee, including order entry 
services to Members, and thus, may access application sessions on 
behalf of one or more Members. Extranets offer physical connectivity 
services to Members and non-Members.
    \7\ The Exchange initially filed the proposed changes on January 
31, 2024 (SR-MEMX-2024-03). On February 8, 2024, the Exchange 
withdrew that filing and submitted this filing.
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Membership Fee Waiver
    Currently, MEMX applies a Membership Fee Waiver to all new

[[Page 14548]]

Members of the Exchange, which is set to expire on January 31, 2024. 
Under the current Membership Fee Waiver, new Members who join the 
Exchange after January 31, 2024, 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 February 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'').\8\ 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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    \8\ 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 February 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 February 29, 2024. The Exchange 
proposes to continue to waive Membership Fees for all new Members who 
join the exchange on or before February 29, 2024. Under the proposed 
Membership Fee Waiver, new Members who join the Exchange after February 
29, 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 \9\ 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 March 1, 2024. In addition, new Members of 
MEMX Options who join after February 29, 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 March 1, 2024. 
Specifically, the Exchange is proposing to amend the Exchange's 
Membership Fee Schedule to provide that Membership Fees will be waived 
for new Members of the Exchange until March 1, 2024.
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    \9\ Additional Fees applicable to Options Members, per the 
Exchange's Fee Schedule, include monthly fees specifically 
applicable to Options Order Entry Firms or Options Market Makers, 
both as defined in the Fee Schedule.
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Options Connectivity Fee Waiver
    Currently, MEMX applies an Options Connectivity Fee Waiver to all 
Members and non-Members of the Exchange, which is set to expire on 
January 31, 2024. Under the current Options Connectivity Fee Waiver, 
fees charged to Members and Non-Members for physical connectivity to 
MEMX Options \10\ and for application sessions (otherwise known as 
``logical ports'') that a Member utilizes in connection with their 
participation on MEMX Options would not be assessed until February 1, 
2024. Specifically, the physical connectivity fees are $6,000 per month 
for a physical connection in the data center where the Exchange 
primarily operates under normal market conditions (``Primary Data 
Center''), and $3,000 per month for a physical connection at the 
geographically diverse data center, which is operated for backup and 
disaster recovery purposes (``Secondary Data Center''), and the 
application session fees are $450 per month for an application session 
used for order entry (``Order Entry Port'') and $450 per month for an 
application session for receipt of drop copies (``Drop Copy Port''), to 
the extent such ports are in the Primary Data Center.\11\
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    \10\ Physical connections may be used to access both MEMX 
equities and options platforms, as such, the Exchange internally 
verifies whether new connections are being used solely for Options 
connections in order to determine whether such connection qualifies 
for the Options Connectivity Fee Waiver.
    \11\ See Securities Exchange Act Release No. 99275 (January 4, 
2024), 89 FR 1606 (January 10, 2024) (SR-MEMX-2023-39).
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    The Exchange believes that the existing Options Connectivity Waiver 
has been effective in incentivizing options market participants to join 
MEMX Options. As noted above, 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 February of 2024 and would like to extend 
the Options Connectivity 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 Options Connectivity 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 
Options Connectivity Fee Waiver to expire on February 29, 2024. The 
Exchange proposes to continue to waive Options Connectivity Fees for 
all Members and non-Members of exchange on or before February 29, 2024. 
Under the proposed Membership Fee Waiver, applicable Options 
Connectivity Fees of $6,000 per month for each physical connection in 
the Primary Data Center and $3,000 per month for each physical 
connection in the Secondary Center, and $450 per month for each Order 
Entry Port and Drop Copy Port in the Exchange's Primary Data Center 
will be assessed to Members and non-Members beginning March 1, 2024. 
Specifically, the Exchange is proposing to amend the Exchange's 
Connectivity Fee Schedule to provide that all Connectivity and 
Application Sessions fees solely related to participation on MEMX 
Options shall be waived until March 1, 2024.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\12\ in general, and 
furthers the objectives of Sections 6(b)(4) and6(b)(5) of the Act,\13\ 
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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    \12\ 15 U.S.C. 78f.
    \13\ 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

[[Page 14549]]

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 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.
    The Exchange believes it is reasonable to extend the timeframe of 
the Options Connectivity Fee Waiver for new and existing Members and 
non-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 Options Connectivity 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.
    In addition, the Exchange believes that the proposed extension of 
the Options Connectivity Fee Waiver is equitable and not unfairly 
discriminatory in that it will apply uniformly to all Members and non-
Members of the Exchange.

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.'' \14\
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    \14\ 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. Similarly, the Exchange believes that 
extending the timeframe of the Options Connectivity Fee Waiver will 
continue to provide an incentive for options trading firms to continue 
to participate on the Exchange during the current phase of the rollout 
of MEMX Options. 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 and Options Connectivity Fee Waiver timeframes will incent 
market participants to join the Exchange during the extended Waiver 
periods. 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 Membership Fee 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

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19(b)(3)(A)(ii) of the Act \15\ and Rule 19b-4(f)(2) \16\ thereunder.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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-2024-05 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-2024-05. 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-MEMX-2024-05 and should be 
submitted on or before March 19, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-03904 Filed 2-26-24; 8:45 am]
BILLING CODE 8011-01-P