[Federal Register Volume 89, Number 135 (Monday, July 15, 2024)]
[Notices]
[Pages 57463-57467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15400]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100469; File No. SR-MEMX-2024-26]


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

July 9, 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 June 28, 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

    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 July 1, 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 purpose of the proposed rule change is to amend the Fee 
Schedule to: (1) adopt a new tier under the Liquidity Provision Tiers; 
(2) modify the required criteria under Liquidity Provision Tiers 2, 3, 
and 4; (3) modify NBBO Setter Tier 1 by modifying the required criteria 
under such tier; and (4) eliminate the DLI Additive Rebate, each as 
further described below.
    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 16.1% of the total market share 
of executed volume of equities trading.\4\ 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 2.1% of the overall 
market share.\5\ 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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    \4\ Market share percentage calculated as of June 26, 2024. The 
Exchange receives and processes data made available through 
consolidated data feeds (i.e., CTS and UTDF).
    \5\ Id.
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Adoption of New Liquidity Provision Tier
    The Exchange currently provides a standard rebate of $0.0015 per 
share 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''). The Exchange also currently offers 
Liquidity Provision Tiers 1-5, under which a Member may receive an 
enhanced rebate for executions of Added Displayed Volume by achieving 
the corresponding required volume criteria for each tier. The Exchange 
now proposes to adopt a new tier under the Liquidity Provision Tiers, 
which, as proposed, would be the new Liquidity Provision Tier 1, and 
the current Liquidity Provision Tiers 1, 2, 3, 4 and 5 would be 
renumbered as Liquidity Provision Tiers 2, 3, 4, 5 and 6 (hereinafter 
referred to as such). The applicable rebates and required criteria 
under Liquidity Provision Tiers 2, 3, 4, 5 and 6, would remain 
unchanged, except for the required criteria under Liquidity Provision 
Tiers 2, 3, and 4, which the Exchange is proposing to modify, as 
further described below.
    Under the proposed new Liquidity Provision Tier 1, the Exchange 
will provide an enhanced rebate of $0.0034 per share for executions of 
Added Displayed Volume for Members that qualify for such tier by 
achieving either: (1) an ADAV \6\ (excluding Retail Orders) that is 
equal to or greater than 0.50% of the TCV,\7\ or (2) a Step-Up ADAV \8\ 
June

[[Page 57464]]

2024 (excluding Retail Orders) that is equal to or greater than 0.07% 
of the TCV in securities priced at or above $1.00 per share and an ADAV 
that is equal to or greater than 0.20% of the TCV in securities priced 
at or above $1.00 per share.\9\ Additionally, the Exchange is proposing 
that criteria (2) of Liquidity Provision Tier 1 will expire no later 
than December 31, 2024, and the Exchange will indicate this in a note 
under the Liquidity Provision Tiers pricing table on the Fee Schedule. 
Finally, the Exchange proposes to provide Members that qualify for the 
proposed new Liquidity Provision Tier 1 a rebate of 0.075% of the total 
dollar value of the transaction for executions of orders in securities 
priced below $1.00 per share that add displayed liquidity to the 
Exchange, which is the same rebate that is currently applicable to such 
executions for all Members.
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    \6\ 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, and ``Displayed ADAV'' means 
ADAV with respect to displayed orders.
    \7\ 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. 
The pricing for the proposed new Liquidity Provision Tier 1 is 
referred to by the Exchange on the Fee Schedule under the existing 
description ``Added displayed volume, Liquidity Provision Tier 1'' 
with a Fee Code of ``B1'', ``D1'', ``J1'', or ``I1'', as applicable, 
to be provided by the Exchange on the monthly invoices provided to 
Members. The Exchange also notes that the pricing for Liquidity 
Provision Tiers 2-5 will be referred to under the existing 
applicable descriptions and Fee Codes, and the pricing for Liquidity 
Provision Tier 6 will be referred to by the Exchange under the new 
description ``Added displayed volume, Liquidity Provision Tier 6'' 
with a Fee Code of ``B6'', ``D6'', ``J6'', or ``I6'' as applicable, 
to be provided by the Exchange on the monthly invoices provided to 
Members.
    \8\ As set forth on the Fee Schedule, ``Step-Up ADAV'' means 
ADAV in the relevant baseline month subtracted from current ADAV.
    \9\ The Exchange is also proposing to include a new note under 
the Notes section of the Fee Schedule that clarifies to the extent 
any tiers have required criteria that applies only to securities 
priced at or above $1.00 per share (as seen in criteria (2) of the 
proposed Liquidity Provision Tier 1), the Exchange determines 
whether a security should be included in the calculation of the ADV, 
ADAV, or TCV, as applicable, in securities priced at or above $1.00 
per share by utilizing the closing price of the security on the date 
of execution.
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    The proposed new Liquidity Provision Tier 1 is designed to 
encourage Members to maintain or increase their order flow that adds 
displayed liquidity to the Exchange in order to qualify for the 
proposed enhanced rebate for executions of Added Displayed Volume, 
thereby promoting price discovery and contributing to a deeper and more 
liquid market to the benefit of all market participants.
Modify Liquidity Provision Tiers 2-4
    The Exchange is also proposing to modify the required criteria 
under Liquidity Provision Tiers 2, 3, and 4. First, with respect to 
Liquidity Provision Tier 2 (previously named Liquidity Provision Tier 
1, as described above), the Exchange currently provides an enhanced 
rebate of $0.0033 per share for executions of Added Displayed Volume in 
securities priced at or above $1.00 per share for Members that qualify 
for such tier by achieving: (1) an ADAV (excluding Retail Orders) that 
is equal to or greater than 0.45% of the TCV; or (2) an ADAV that is 
equal to or greater than 0.30% of the TCV and a Non-Displayed ADAV \10\ 
that is equal to or greater than 6,000,000 shares. The Exchange now 
proposes to modify the required criteria under Liquidity Provision Tier 
2 such that a Member would qualify for such tier by achieving: (1) an 
ADAV (excluding Retail Orders) that is equal to or greater than 0.40% 
of the TCV; or (2) an ADAV that is equal to or greater than 0.30% of 
the TCV in securities priced at or above $1.00 per share and a Non-
Displayed ADAV that is equal to or greater than 6,000,000 shares. Thus, 
such proposed change would decrease the ADAV requirement in criteria 
(1) and modify alternative criteria (2) by excluding securities priced 
below $1.00 from the TCV calculation. In other words, previously, a 
Member qualified for criteria (2) of the tier by achieving an ADAV of 
0.30% of the total TCV (as well as a Non-Displayed ADAV of at least 
6,000,000 shares), and now the Exchange is proposing that a Member 
would qualify for such criteria (2) by achieving an ADAV of 0.30% of 
the TCV only in securities priced at or above $1.00 per share (again, 
as well as a Non-Displayed ADAV of at least 6,000,000 shares).\11\ The 
Exchange is not proposing to change the rebate provided under such 
tier.
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    \10\ As set forth on the Fee Schedule, ``Non-Displayed ADAV'' 
means ADAV with respect to non-displayed orders (including orders 
subject to Display-Price Sliding that receive price improvement when 
executed and Midpoint Peg orders).
    \11\ To clarify, in calculating a Member's ADAV for purposes of 
achieving criteria (2) of Liquidity Provision Tier 2, the Exchange 
will include executions in securities priced below $1.00.
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    With respect to Liquidity Provision Tier 3 (previously named 
Liquidity Provision Tier 2, as described above), the Exchange currently 
provides an enhanced rebate of $0.0032 per share for executions of 
Added Displayed Volume in securities priced at or above $1.00 per share 
for Members that qualify for such tier by achieving an ADAV that is 
equal to or greater than 0.20% of the TCV and an ADV \12\ that is equal 
to or greater than 0.35% of the TCV. Now, the Exchange proposes to 
modify the required criteria under Liquidity Provision Tier 3 such that 
Members qualify for such tier by achieving: (1) an ADAV that is equal 
to or greater than 0.20% of the TCV in securities priced at or above 
$1.00 per share and an ADV that is equal to or greater than 0.40% of 
the TCV in securities priced at or above $1.00 per share; or (2) a 
Step-Up ADAV from June 2024 (excluding Retail Orders) that is equal to 
or greater than 0.05% of the TCV in securities priced at or above $1.00 
per share and an ADAV (excluding Retail Orders) that is equal to or 
greater than 0.20% of the TCV in securities priced at or above $1.00 
per share; or (3) an ADAV that is equal to or greater than 0.30% of the 
TCV. Thus, such proposed change would modify the existing criteria as 
well as add two alternative criteria. First, the Exchange is proposing 
to modify the existing criteria (now alternative criteria (1)) by 
excluding securities priced below $1.00 from the TCV calculation in the 
ADAV requirement, and increasing the ADV requirement from 0.35% to 
0.40% of the TCV, again excluding securities priced below $1.00 from 
the TCV calculation. The two additional alternative criteria are 
proposed criteria (2), which includes a combined Step-Up ADAV and ADAV 
requirement, and proposed criteria (3), which includes an ADAV 
requirement. The Exchange is not proposing to change the rebate 
provided under such tier. Additionally, the Exchange is proposing that 
criteria (2) of Liquidity Provision Tier 3 will expire no later than 
December 31, 2024, and the Exchange will indicate this in a note under 
the Liquidity Provision Tiers pricing table on the Fee Schedule.
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    \12\ 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.
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    With respect to Liquidity Provision Tier 4 (previously named 
Liquidity Provision Tier 3, as described above), the Exchange currently 
provides an enhanced rebate of $0.0030 per share for executions of 
Added Displayed Volume in securities priced at or above $1.00 per share 
for Members that qualify for such tier by achieving an ADAV that is 
equal to or greater than 0.175% of the TCV. Now, the Exchange proposes 
to modify the required criteria under Liquidity Provision Tier 4 such 
that Members qualify for such tier by achieving: (1) an ADAV that is 
equal to or greater than 0.20% of the TCV in securities priced at or 
above $1.00 per share; or (2) an ADAV that is equal to or greater than 
0.175% of the TCV. Thus, such proposed change would add alternative 
criteria (1) and keep the existing criteria intact as alternative 
criteria (2). The Exchange is not proposing to change the rebate 
provided under such tier.
    The Exchange believes that the tiered pricing structure for 
executions of Added Displayed Volume under the proposed modified 
Liquidity Provision Tiers 2, 3, and 4 provides an incremental incentive 
for Members to strive for higher volume thresholds to receive higher 
enhanced rebates for such executions and, as such, is intended to 
encourage Members to maintain or increase their order flow, primarily 
in the form of liquidity-adding volume, to the Exchange, thereby 
contributing to a deeper and more liquid market to the benefit of all 
Members and market participants. Specifically, the Exchange believes 
that, after giving effect to the proposed changes described above, the 
rebate for executions of

[[Page 57465]]

Added Displayed Volume provided under each of the Liquidity Provision 
Tiers remains commensurate with the corresponding required criteria 
under each such tier and is reasonably related to the market quality 
benefits that each such tier is designed to achieve.
NBBO Setter Tier
    The Exchange currently offers NBBO Setter Tier 1 under which a 
Member may receive an additive rebate of $0.0002 per share for a 
qualifying Member's executions of Added Displayed Volume (other than 
Retail Orders) in securities priced at or above $1.00 per share that 
establish the NBBO and have a Fee Code B \13\ (such orders, ``Setter 
Volume''), and an additive rebate of $0.0001 per share for executions 
of Added Displayed Volume (other than Retail Orders) that do not 
establish the NBBO (i.e., Fee Codes D and J) \14\ by achieving: (1) an 
ADAV with respect to orders with Fee Code B that is equal to or greater 
than 5,000,000 shares; or (2) an ADAV in securities priced at or above 
$1.00 per share (excluding Retail Orders) that is equal to or greater 
than 0.30% of the TCV in securities priced at or above over $1.00 per 
share.\15\ Now, the Exchange proposes to modify the required criteria 
under NBBO Setter Tier 1 such that a Member would now qualify for such 
tier by achieving: (1) an ADAV with respect to orders with Fee Code B 
that is equal to or greater than 5,000,000 shares; or (2) an ADAV with 
respect to orders with Fee Code B that is equal to or greater than 
2,000,000 shares and an ADAV in securities priced at or above $1.00 per 
share (excluding Retail Orders) that is equal to or greater than 0.30% 
of the TCV in securities priced at or above over $1.00 per share. Thus, 
such proposed change keeps the first alternative criteria intact with 
no changes but modifies the second alternative criteria by adding a 
requirement that a Member also achieve an ADAV with respect to orders 
with Fee Code B that is equal to or greater than 2,000,000 shares.\16\ 
The Exchange is not proposing to change the amount of the additive 
rebates provided under the NBBO Setter Tier 1.
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    \13\ The Exchange notes that orders with Fee Code B include 
orders, other than Retail Orders, that establish the NBBO.
    \14\ The Exchange notes that orders with Fee Code J include 
orders, other than Retail Orders, that establish a new BBO on the 
Exchange that matches the NBBO first established on an away market. 
Orders with Fee Code D include orders that add displayed liquidity 
to the Exchange but that are not Fee Code B or J, and thus, orders 
with Fee Code B, D or J include all orders, other than Retail 
Orders, that add displayed liquidity to the Exchange.
    \15\ The pricing is referred to by the Exchange on the Fee 
Schedule under the existing description ``NBBO Setter Tier'' with a 
Fee Code of ``S1'' to be appended to the otherwise applicable Fee 
Code for qualifying executions.
    \16\ The Exchange notes that the remainder of alternative 
criteria (2) under NBBO Setter Tier 1 was implemented on June 3, 
2024. See Securities Exchange Act Release No. 100320 (June 12, 
2024), 89 FR 51576 (June 18, 2024) (SR-MEMX-2024-24). In that 
filing, the Exchange indicated that it would determine whether a 
security meets the ``priced at or above $1.00 per share'' threshold 
for purposes of calculating the ADAV and TCV by using the prior 
day's closing price. The Exchange is proposing herein, however, to 
clarify with a note in the Notes section on the Fee Schedule, as 
described above, that it will determine whether a security is 
``priced at or above $1.00 per share'' by using the closing price of 
the security on the date of execution.
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    The Exchange believes that the proposed modified criteria provides 
an incremental incentive for Members to strive for higher ADAV in NBBO 
setting orders (i.e., Fee Code B) on the Exchange to receive the 
additive rebate for qualifying executions of Added Displayed Volume 
under such tier, and thus, it is designed to encourage Members that do 
not currently qualify for such tier to increase their overall orders 
that add liquidity to the Exchange. The Exchange also believes that the 
criteria change reflects a reasonable and competitive pricing structure 
that is right-sized and consistent with the Exchange's overall pricing 
philosophy of encouraging added and/or displayed liquidity. The 
Exchange believes that the proposed modified criteria would further 
incentivize increased order flow to the Exchange, thereby contributing 
to a deeper and more liquid market to the benefit of all Members.
DLI Additive Rebate
    Lastly, the Exchange proposes to eliminate the DLI Additive Rebate. 
Currently, the Exchange offers a DLI Additive Rebate incentive that is 
applicable to DLI Tier 1, which provides an additive rebate of $0.0005 
per share for executions of Added Displayed Volume for a Member that 
qualifies for DLI Tier 1 as well as either the criteria under the 
previous Liquidity Provision Tier 1 or Liquidity Provision Tier 2. The 
Exchange now proposes to eliminate such DLI Additive Rebate. The 
purpose of eliminating the DLI Additive Rebate is for business and 
competitive reasons, as the Exchange believes the elimination of such 
additive rebate would decrease the Exchange's expenditures with respect 
to the Exchange's transaction pricing, which would enable the Exchange 
to redirect future resources and funding into other incentives and 
tiers intended to incentivize increased order flow. For these reasons, 
the Exchange no longer wishes to, nor is it required to, maintain such 
tier.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\17\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ 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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    \17\ 15 U.S.C. 78f.
    \18\ 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 
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.'' \19\
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    \19\ 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 order 
flow to the Exchange, which the Exchange believes would promote price 
discovery and enhance liquidity and market quality on

[[Page 57466]]

the Exchange to the benefit of all Members and market participants.
    The Exchange notes that volume-based incentives and discounts have 
been widely adopted by exchanges, including the Exchange, and are 
reasonable, 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 that the proposed new 
Liquidity Provision Tier 1 is reasonable, equitable and not unfairly 
discriminatory for these same reasons, as it would provide Members with 
an additional incentive to achieve a certain volume threshold on the 
Exchange, is available to all Members on an equal basis, and, as noted 
above, is designed to encourage Members to maintain or increase their 
orders that add displayed liquidity to the Exchange in order to qualify 
for the enhanced rebate for executions of Added Displayed Volume, 
thereby promoting price discovery and contributing to a deeper and more 
liquid market to the benefit of all market participants. The Exchange 
also believes the enhanced rebate for executions of Added Displayed 
Volume under the proposed new Liquidity Provision Tier 1 reflects a 
reasonable and equitable allocation of fees and rebates because it is 
higher than the rebates provided for such executions under Liquidity 
Provision Tiers 2-6, which have lower volume thresholds as their 
required criteria, and is commensurate with its required criteria and 
the market quality benefits it is designed to achieve, as described 
above.
    The Exchange believes that Liquidity Provisions Tier 2, 3, and 4, 
and NBBO Setter Tier 1, each as modified by the proposed changes to the 
required criteria under each tier as described above, are reasonable, 
equitable and not unfairly discriminatory for these same reasons. Such 
tiers would provide Members with an incremental incentive to achieve 
certain volume thresholds on the Exchange, are available to all Members 
on an equal basis, and, as described above, are designed to encourage 
Members to maintain or increase their order flow, including in the form 
of displayed, liquidity-adding, and/or NBBO-setting orders to the 
Exchange in order to qualify for an enhanced rebate, as applicable, 
thereby contributing to a deeper, more liquid and well balanced market 
ecosystem on the Exchange to the benefit of all Members and market 
participants.
    The Exchange believes the proposed change to eliminate the DLI 
Additive Rebate is reasonable because, as noted above, it would enable 
the Exchange to redirect the associated resources and funding into 
other incentives and tiers, and the Exchange is not required to 
maintain such incentive or provide Members any opportunities to receive 
additive rebates. The Exchange believes the proposal to eliminate such 
incentive is also equitable and not unfairly discriminatory because it 
applies equally to all Members, in that the incentive would no longer 
be available for any Member.
    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 \20\ 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.
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    \20\ 15 U.S.C. 78f(b)(4) and (5).
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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 incentivize market participants to direct 
additional order flow to the Exchange, thereby enhancing liquidity and 
market quality on the Exchange to the benefit of all Members and 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.'' \21\
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    \21\ See supra note 19.
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Intramarket Competition
    As discussed above, the Exchange believes that the proposal would 
incentivize Members to submit additional order flow, including 
displayed, liquidity-adding, and/or NBBO setting orders to the 
Exchange,, thereby enhancing liquidity and market quality on the 
Exchange to the benefit of all Members, 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. 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 Liquidity 
Provision Tier 1 and the modified Liquidity Provision Tiers 2, 3, and 4 
and NBBO Setter Tier 1 and thus receive the corresponding enhanced 
rebate for executions of Added Displayed Volume, as applicable, would 
be available to all Members that meet the associated volume 
requirements in any month. As described above, the Exchange believes 
that the proposed new required criteria under each such tier are 
commensurate with the corresponding rebate under such tier and are 
reasonably related to the enhanced liquidity and market quality that 
such tier is designed to promote. Additionally, as noted above, the 
elimination of the DLI Additive Rebate will apply to all Members 
equally. 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 16.1% of the total market share of executed volume of 
equities trading. Thus, in such a low-concentrated and highly 
competitive market, no single

[[Page 57467]]

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, 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 changes represent a competitive proposal through which the 
Exchange is seeking to generate additional revenue with respect to its 
transaction pricing and to encourage the submission of additional order 
flow to the Exchange through volume-based tiers, which have been widely 
adopted by exchanges, including the Exchange. 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 pricing incentives to market participants.
    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.'' \22\ 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'. . . .''.\23\ 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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    \22\ Id.
    \23\ 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 \24\ and Rule 19b-4(f)(2) \25\ thereunder.
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    \24\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \25\ 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-2024-26 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-MEMX-2024-26. 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-MEMX-2024-26 and should be 
submitted on or before August 5, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15400 Filed 7-12-24; 8:45 am]
BILLING CODE 8011-01-P