[Federal Register Volume 89, Number 145 (Monday, July 29, 2024)]
[Notices]
[Pages 60945-60953]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16547]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100575; File No. SR-MRX-2024-25]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend MRX's 
Options 7

July 23, 2024.
    Pursuant to 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 July 15, 2024, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``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 proposes to amend the Exchange's Pricing Schedule at 
Options 7.\3\
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    \3\ On June 11, 2024, the Exchange withdrew SR-MRX-2024-13 and 
replaced it with SR-MRX-2024-14. On June 25, 2024, the Exchange 
withdrew SR-MRX-2024-14 and replaced it with SR-MRX-2024-16. On July 
2, 2024, the Exchange withdrew SR-MRX-2024-16 and replaced it with 
SR-MRX-2024-22. On July 15, 2024, the Exchange withdrew SR-MRX-2024-
22 and replaced it with this rule change.
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    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, at the 
principal office of the Exchange, 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
    MRX proposes to amend the Exchange's Pricing Schedule at Options 7 
to make various changes. Specifically, the Exchange proposes to amend 
Options 7: Section 1, General Provisions; Section 3, Regular Order Fees 
and Rebates; and Section 4, Complex Order Fees. Each change will be 
described below.
Options 7, Section 3--Table 1
    Today, MRX offers Regular Order Maker Fees/Rebates and Taker Fees 
in Penny and Non-Penny Symbols in Options 7, Section 3, Table 1. 
Specifically, with respect to Penny Symbols, the Exchange assesses/pays 
Market Makers \4\ a Tier 1 Maker Fee of $0.10 per contract, no Tier 2 
Maker Fee, a Tier 3 Maker Rebate of $0.05 per contract and a Tier 4 
Maker Rebate of $0.10 per contract in Penny Symbols. Today, the 
Exchange assesses Market Maker Tier 1 through Tier 4 Penny Symbol Taker 
Fees of $0.50 per contract. Today, the Exchange assesses Non-Nasdaq MRX 
Market Makers (FarMM),\5\ Firm Proprietary/Broker-Dealer \6\ and 
Professional Customers \7\ a Tier 1 through Tier 4 Maker Fee of $0.47 
per contract and a Tier 1 through Tier 4 Taker Fee of $0.50 per 
contract in Penny Symbols. Finally, today, the Exchange assesses a 
Priority Customer \8\ no Maker Fees and pays no Maker Rebates and 
assesses a $0.20 per contract Tier 1 through Tier 4 Taker Fee in Penny 
Symbols.
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    \4\ A ``Market Maker'' is a market maker as defined in Nasdaq 
MRX Rule Options 1, Section 1(a)(21). See Options 7, Section 1(c).
    \5\ A ``Non-Nasdaq MRX Market Maker'' is a market maker as 
defined in Section 3(a)(38) of the Securities Exchange Act of 1934, 
as amended, registered in the same options class on another options 
exchange. See Options 7, Section 1(c).
    \6\ A ``Firm Proprietary'' order is an order submitted by a 
Member for its own proprietary account. A ``Broker-Dealer'' order is 
an order submitted by a Member for a broker-dealer account that is 
not its own proprietary account. See Options 7, Section 1(c).
    \7\ A ``Professional Customer'' is a person or entity that is 
not a broker/dealer and is not a Priority Customer. See Options 7, 
Section 1(c).
    \8\ A ``Priority Customer'' is a person or entity that is not a 
broker/dealer in securities, and does not place more than 390 orders 
in listed options per day on average during a calendar month for its 
own beneficial account(s), as defined in Nasdaq MRX Options 1, 
Section 1(a)(36). Unless otherwise noted, when used in this Pricing 
Schedule the term ``Priority Customer'' includes ``Retail''. See 
Options 7, Section 1(c).
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    With respect to Non-Penny Symbols, today, the Exchange assesses 
Market Makers a Tier 1 Maker Fee of $0.35 per contract, a Tier 2 Maker 
Fee of $0.20 per contract, a Tier 3 Maker Fee of $0.15 per contract and 
a Tier 4 Maker Fee of $0.10 per contract. Today, the Exchange assesses 
Market Makers a Tier 1 through Tier 4 Taker Fee of $1.10 per contract 
in Non-Penny Symbols. Today, the Exchange assesses Non-Nasdaq MRX 
Market Makers (FarMM), Firm Proprietary/Broker-Dealer and Professional 
Customers a Tier 1 through Tier 4 Maker Fee of $0.90 per contract and a 
Tier 1 through Tier 4 Taker Fee of $1.10 per contract in Non-Penny 
Symbols. Finally, today, the Exchange assesses a Priority Customer no 
Maker Fees and assesses a $0.40 per contract Tier 1 through Tier 4 
Taker Fee in Non-Penny Symbols.
    At this time, the Exchange proposes to no longer offer Maker 
Rebates for adding liquidity and instead offer Taker Rebates for 
removing liquidity. With this new structure, the Exchange would 
continue to assess Priority Customers no Maker Fees for Penny and Non-
Penny Symbols to continue to encourage Members to send Priority 
Customer order flow that adds liquidity to MRX and rests on the order 
book. The Exchange proposes to begin offering Priority Customer Taker 
Rebates in Penny and Non-Penny Symbols to encourage Members to send 
Priority Customer order flow that removes liquidity from MRX's order 
book. MRX's proposal offers to pay rebates to Members to engage in 
Priority Customer liquidity removing activity on MRX. Specifically, the 
Exchange believes that the Taker Rebates will encourage additional 
order flow to be sent to MRX with the goal of removing liquidity and 
obtaining a Taker Rebate. To the extent this proposal attracts such 
order flow to MRX, all Members should benefit through more trading 
opportunities.
    As a result of this structural change in pricing, the Exchange 
would assess a Market Maker a $0.50 per contract Penny Symbol Maker Fee 
in Tier 1 through Tier 4. This would be an increase in the Tier 1 Maker 
Fee of $0.40 per contract and an increase in the Tier 2 Maker Fee of 
$0.50 per contract for Market Makers in Penny Symbols. The Exchange 
would no longer pay a $0.05 per contract Maker Rebate in Tier 3 nor pay 
a $0.10 per contract Tier 4 Maker Rebate to Market Makers in Penny 
Symbols and instead assess the $0.50 per contract Maker Fee. 
Additionally, a Market Maker would pay a decreased Penny Symbol Taker

[[Page 60946]]

Fee of $0.35 per contract in Tier 1 through Tier 4 as compared to the 
current $0.50 per contract Taker Fee. Further, the Exchange would 
assess Non-Nasdaq MRX Market Makers (FarMM), Firm Proprietary/Broker-
Dealer and Professional Customers a increased Tier 1 through Tier 4 
Penny Symbol Maker Fee of $0.50 per contract, instead of $0.47 per 
contract, and a decreased Tier 1 through Tier 4 Taker Fee of $0.35 per 
contract, instead of $0.50 per contract in Penny Symbols. Finally, the 
Exchange would continue to assess a Priority Customer no Maker Fees in 
Penny Symbols. Additionally, the Exchange would replace the Priority 
Customer Penny Symbol Tier 1 Taker Fee of $0.20 with a Taker Rebate of 
$0.31 per contract. The Exchange would replace the Priority Customer 
Penny Symbol Tier 2 Taker Fee of $0.20 with a Taker Rebate of $0.36 per 
contract. The Exchange would replace the Priority Customer Penny Symbol 
Tier 3 Taker Fee of $0.20 with a Taker Rebate of $0.41 per contract. 
Finally, the Exchange would replace the Priority Customer Penny Symbol 
Tier 4 Taker Fee of $0.20 with a Taker Rebate of $0.44 per contract.
    At this time, the Exchange proposes to increase the Market Maker 
Non-Penny Symbol Maker Fees in Tier 1 from $0.35 to $1.25 per contract, 
the Tier 2 Maker Fee from $0.20 to $1.25 per contract, the Tier 3 Maker 
Fee from $0.15 to $1.25 per contract, and the Tier 4 Maker Fee for 
$0.10 to $1.25 per contract. The Exchange proposes to continue to 
assess Market Makers a $1.10 per contract Non-Penny Symbol Taker Fee. 
Further, the Exchange would assess Non-Nasdaq MRX Market Makers 
(FarMM), Firm Proprietary/Broker-Dealer and Professional Customers an 
increased Tier 1 through Tier 4 Penny Symbol Maker Fee of $1.25 per 
contract, instead of $0.90 per contract, and would assess the same Tier 
1 through Tier 4 Taker Fee of $1.10 per contract in Non-Penny Symbols. 
Finally, the Exchange would continue to assess a Priority Customer no 
Non-Penny Symbol Maker Fees. Additionally, the Exchange would replace 
the Priority Customer Non-Penny Symbol Taker Fees with Taker Rebates as 
follows: instead of a $0.40 per contract Tier 1 Taker Fee, MRX would 
pay an $0.80 per contract Taker Rebate; instead of a $0.40 per contract 
Tier 2 Taker Fee, MRX would pay a $0.90 per contract Taker Rebate; 
instead of a $0.40 per contract Tier 3 Taker Fee, MRX would pay a $1.00 
per contract Taker Rebate; and instead of a $0.40 per contract Tier 4 
Taker Fee, MRX paya $1.10 per contract Taker Rebate.
    The Exchange believes that the Priority Customer Taker Rebates will 
encourage market participants to remove liquidity on MRX in order to be 
eligible for Taker Rebates.
    As a result of the change to Table 1 in Options 7, Section 3, the 
Exchange proposes to amend the description of an ``Exposed Order.'' 
Today, an Exposed Order is an order that is broadcast via an order 
exposure alert as described within Options 5, Section 4 (Order 
Routing). Unless otherwise noted in Options 7, Section 3 pricing, 
Exposed Orders will be assessed the applicable ``Taker'' Fee and any 
order or quote that executes against an Exposed Order during a Route 
Timer will be paid/assessed the applicable ``Maker'' Rebate/Fee. The 
Exchange proposes to instead state that is an order that is broadcast 
via an order exposure alert as described within Options 5, Section 4 
(Order Routing). Unless otherwise noted in Options 7, Section 3 
pricing, Exposed Orders will be paid/assessed the applicable ``Taker'' 
Fee/Rebate and any order or quote that executes against an Exposed 
Order during a Route Timer will be assessed the applicable ``Maker'' 
Fee. The Exchange is amending this description because the Exchange 
would no longer pay Maker Rebates and would instead pay Taker Rebates 
as proposed in the Pricing Schedule at Options 7, Section 3, Table 1.
    The Exchange also proposes to conform note 6 in Options 7, Section 
3 to account for the removal of Maker Rebates and the addition of 
Priority Customer Taker Rebates. Options 7, Section 3 currently 
provides, ``Market Maker Tier 1 through Tier 4 Maker Fees/Rebates and 
Priority Customer Tier 1 through Tier 4 Taker Fees will be $0.00 per 
contract, in Penny Symbols, for the following option symbols: SPY, QQQ 
and IWM.'' The Exchange proposes to instead state, ``Market Maker Tier 
1 through Tier 4 Maker Fees and Priority Customer Tier 1 through Tier 4 
Taker Fees/Rebates will be $0.00 per contract, in Penny Symbols, for 
the following option symbols: SPY, QQQ and IWM.''
    The Exchange also proposes to remove the discounted fees in note 7 
of Options 7, Section 3 in Table 1 which provides, ``Members that 
execute Total Affiliated Member or Affiliated Entity Priority Customer 
ADV of 0.30% Customer Total Consolidated Volume in Regular Orders for 
Penny and Non-Penny Symbols which remove liquidity in a given month 
will be assessed: (1) a $0.10 per contract Priority Customer Taker Fee 
in Penny Symbols; and (2) a $0.20 per contract Priority Customer Taker 
Fee in Non-Penny Symbols.'' The Exchange would no longer offer these 
discounts with the new fee structure and proposes to instead 
incentivize Members differently with its new Taker Rebates.
Options 7, Section 3--Table 2
    Today, Options 7, Section 3, Table 2 applies only to regular 
orders. Today, the Exchange assesses the following Crossing Order Fees 
in Penny and Non-Penny Symbols:

                              Penny Symbols
------------------------------------------------------------------------
                                                              Fee for
                                              Fee for      responses to
           Market participant                crossing        crossing
                                            orders \1\      orders \2\
------------------------------------------------------------------------
Market Maker \4\........................           $0.20           $0.50
Non-Nasdaq MRX Market Maker (FarMM).....            0.20            0.50
Firm Proprietary/Broker-Dealer..........            0.20            0.50
Professional Customer...................            0.20            0.50
Priority Customer.......................            0.00            0.50
------------------------------------------------------------------------


[[Page 60947]]


                            Non-Penny Symbols
------------------------------------------------------------------------
                                                              Fee for
                                              Fee for      responses to
           Market participant                crossing        crossing
                                            orders \1\      orders \2\
------------------------------------------------------------------------
Market Maker \4\........................           $0.20           $1.10
Non-Nasdaq MRX Market Maker (FarMM).....            0.20            1.10
Firm Proprietary/Broker-Dealer..........            0.20            1.10
Professional Customer...................            0.20            1.10
Priority Customer.......................            0.00            1.10
------------------------------------------------------------------------

    The Exchange proposes to amend the title of Options 7, Section 3 
from ``Regular Order Fees and Rebates'' to ``Fees and Rebates for 
Regular Orders and All Crossing Orders'' to account for the inclusion 
of certain Complex Order crossing order fees. The Exchange proposes to 
add a title to Options 7, Section 3, Table 2, ``Regular and Complex 
Crossing Orders'' with a new note 3. Proposed note 3 of Options 7, 
Section 3 would provide that the Table 2 fees apply to Regular and 
Complex orders entered into the Facilitation Mechanism; the Solicited 
Order Mechanism; the Block Order Mechanism \9\ as applicable; QCC 
Orders; Complex QCC Orders; QCC with Stock Orders; and Complex QCC with 
Stock Orders.
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    \9\ Block Orders are single-leg orders only. Additionally, Block 
Orders are single-sided auctions.
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    The Exchange proposes to amend Table 2 which consists of the Fee 
for Crossing Orders.\10\ The Exchange proposes to decrease the Penny 
Symbol Non-Priority Customer \11\ Fees for Crossing Orders from $0.20 
per contract to $0.02 per contract for orders in the Facilitation 
Mechanism, Solicitation Mechanism and Block Orders. A Priority Customer 
would continue to be assessed no Fee for Crossing Orders in Penny 
Symbols. The Exchange is proposing to carve out pricing for QCC Orders, 
Complex QCC Orders, QCC with Stock Orders and Complex QCC with Stock 
Orders, in addition to PIM Orders which are already carved out from the 
fees that apply to the originating and contra-side orders in Table 2. 
The Exchange proposes to amend note 1 of Options 7, Section 3, Table 2 
to provide,
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    \10\ A ``Crossing Order'' is an order executed in the Exchange's 
Facilitation Mechanism, Solicited Order Mechanism, Price Improvement 
Mechanism (``PIM'') or submitted as a Qualified Contingent Cross 
order. For purposes of this Pricing Schedule, orders executed in the 
Block Order Mechanism are also considered Crossing Orders. See 
Options 7, Section 1(c).
    \11\ ``Non-Priority Customers'' include Market Makers, Non-
Nasdaq GEMX Market Makers (FarMMs), Firm Proprietary/Broker-Dealers, 
and Professional Customers.

    Fees apply to the originating and contra-side orders, except for 
PIM Orders and Qualified Contingent Cross (``QCC'') Orders, Complex 
QCC Orders, QCC with Stock Orders and Complex QCC with Stock Orders. 
The Fee for Crossing Orders for QCC Orders, Complex QCC Orders, QCC 
with Stock Orders and Complex QCC with Stock Orders is $0.20 per 
contract for Non-Priority Customer orders in Penny and Non-Penny 
Symbols. Priority Customer orders are not assessed a fee for 
Crossing Orders. Regular and Complex PIM Orders are subject to 
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separate pricing in Part A below.

The Exchange would continue to assess Non-Priority Customer QCC Orders 
and QCC with Stock Orders the same $0.20 per contract Fee for Crossing 
Orders in Penny Symbols as today and would continue to assess Priority 
Customers no Fee for Crossing Orders in Penny and Non-Penny Symbols. 
There are no Fees for Responses to Crossing Orders for QCC Orders and 
QCC with Stock Orders.\12\ The Exchange is not amending the Non-Penny 
Fees for Crossing Orders in Options 7, Section 3, Table 2.
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    \12\ QCC Orders and QCC with Stock Orders are automatically 
executed upon entry. Responses cannot be submitted. See Options 3, 
Section 12.
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    With this proposal, the Exchange would assess Complex QCC Orders 
and Complex QCC with Stock Orders the same Fees for Crossing Orders as 
QCC Orders and QCC with Stock Orders.\13\ Specifically, Complex QCC 
Orders and Complex QCC with Stock Orders would be assessed a $0.20 per 
contract Fee for Crossing Orders to Non-Priority Customers in Penny and 
Non-Penny Symbols. Priority Customers would not be assessed a Fee for 
Crossing Orders. Complex QCC Orders and Complex QCC with Stock Orders 
would be subject to lower Penny Symbol fees and slightly higher Non-
Penny Fees for Crossing Orders. Today, Options 7, Section 4 assesses a 
$0.35 per contract Penny Symbol to all Non-Priority Customer Orders and 
an $0.85 per contract Non-Penny Symbol fee to all Members for Complex 
QCC Orders and Complex QCC with Stock Orders.
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    \13\ Complex QCC Orders and Complex QCC with Stock Orders are 
automatically executed upon entry. Responses cannot be submitted. 
See Options 3, Section 12.
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    Additionally, the Exchange proposes to assess the Options 7, 
Section 3, Table 2 fees to orders entered into the Complex Facilitation 
Mechanism and Complex Solicitation Mechanism in addition to Regular 
Orders entered into these mechanisms. The Exchange would assess orders 
entered into the Complex Facilitation Mechanism and Complex 
Solicitation Mechanism the proposed reduced $0.02 per contract Fee for 
Crossing Orders in Penny Symbols and $0.20 per contract for Non-Penny 
Symbols and would assess Priority Customers no Fee for Crossing Orders 
in Penny and Non-Penny Symbols. The Exchange would also assess orders 
entered into the Complex Facilitation Mechanism and Complex 
Solicitation Mechanism a $0.50 Fee for Responses to Crossing Orders to 
all Members for Penny Symbols and a $1.10 Fee for Responses to Crossing 
Orders to all Members in Non-Penny Symbols. This pricing would be in 
lieu of the Complex Order pricing in Options 7, Section 4. As noted 
above, today, Options 7, Section 4 assesses a $0.35 per contract Penny 
Symbol to all Non-Priority Customer Orders and an $0.85 per contract 
Non-Penny Symbol fee to all Members for orders entered into the Complex 
Facilitation Mechanism and Complex Solicitation Mechanism. The proposed 
pricing for the Complex Facilitation Mechanism and Complex Solicitation 
Mechanism would be subject to the same pricing as the Regular 
Facilitation Mechanism and Solicited Order Mechanism. The Exchange 
believes that the pricing in Options 7, Section 4, Table 2 will 
incentivize Members to utilize these mechanisms.
    The Exchange also proposes to define a Non-Priority Customer in 
Options 7, Section 1. Specifically, the Exchange proposes to state, 
``Non-Priority Customers'' include Market Makers, Non-Nasdaq MRX Market 
Makers (FarMMs), Firm Proprietary/Broker-Dealers, and Professional 
Customers.''

[[Page 60948]]

    The Exchange proposes to amend notes 1 and 2 of Options 7, Section 
3, Table 2 to add the words ``and Complex'' with respect to PIM Orders 
to make clear that, all PIM Orders, Regular and Complex, would be 
subject to the Part A pricing in Options 7, Section 3. As a result of 
this amendment, there is no pricing change for Regular and Complex PIM 
Orders.
    The Exchange also proposes a Penny Symbol Break-Up Rebate for 
Regular and Complex Orders entered into the Exchange's Facilitation 
Mechanism and Solicited Order Mechanism for Priority Customers of $0.30 
per contract. Today, orders entered into the Complex Facilitation 
Mechanism and the Complex Solicited Order Mechanism are not offered a 
Break-Up Rebate. The Exchange believes that the new Priority Customer 
Break-up Rebate will attract MRX Members to utilize the Exchange's 
Facilitation Mechanism and Solicited Order Mechanism for both Regular 
and Complex Orders. The Exchange proposes to add a new note 5 in 
Options 7, Section 3, Table 2 that provides that break-up rebates are 
provided for an originating Priority Customer Regular or Complex order 
entered into the Facilitation Mechanism or Solicited Order Mechanism 
that executes with any response (order or quote) other than the contra-
side order.
Options 7, Section 3--Table 3
    Currently, Options 7, Section 3, Table 3 contains the Qualifying 
Tier Thresholds for Tier 1 through Tier 4 pricing. Specifically, today, 
market participants are charged the applicable tier maker/taker fees 
(or are eligible for rebates) if they meet the applicable tier 
thresholds based on Total Affiliated Member or Affiliated Entity ADV 
\14\ in Table 3 of Options 7, Section 3. Market Makers may also 
alternatively qualify for these fees if they meet the applicable tier 
thresholds based on Total Market Maker ADV.\15\
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    \14\ Total Affiliated Member or Affiliated Entity ADV means all 
ADV executed on the Exchange in all symbols and order types, 
including volume executed by Affiliated Members or Affiliated 
Entities. All eligible volume from Affiliated Members or an 
Affiliated Entity will be aggregated in determining applicable 
tiers.
    \15\ Total Market Maker ADV means all Market Maker ADV executed 
on the Exchange in all symbols and order types, including volume 
executed by Affiliated Members or Affiliated Entities. All eligible 
volume from Affiliated Members or an Affiliated Entity will be 
aggregated in determining applicable tiers.

                       Qualifying Tier Thresholds
------------------------------------------------------------------------
                               Total affiliated
                                   member or              Total market
            Tiers                 affiliated       OR       maker ADV
                                  entity ADV
------------------------------------------------------------------------
Tier 1.......................  executes 0.00%    .....  executes up to
                                to less than             0.10% of
                                0.75% of                 Customer Total
                                Customer Total           Consolidated
                                Consolidated             Volume which
                                Volume.                  adds liquidity
                                                         in Regular
                                                         Orders.
Tier 2.......................  executes 0.75%    .....  executes more
                                to less than             than 0.10% and
                                1.50% of                 up to 0.25% of
                                Customer Total           Customer Total
                                Consolidated             Consolidated
                                Volume.                  Volume which
                                                         adds liquidity
                                                         in Regular
                                                         Orders.
Tier 3.......................  executes 1.50%    .....  executes more
                                to less than             than 0.25% and
                                2.25% of                 up to 0.45% of
                                Customer Total           Customer Total
                                Consolidated             Consolidated
                                Volume.                  Volume which
                                                         adds liquidity
                                                         in Regular
                                                         Orders.
Tier 4.......................  executes 2.25%    .....  executes more
                                or more of               than 0.45% of
                                Customer Total           Customer Total
                                Consolidated             Consolidated
                                Volume.                  Volume which
                                                         adds liquidity
                                                         in Regular
                                                         Orders.
------------------------------------------------------------------------

Today, the highest tier threshold attained applies retroactively in a 
given month to all eligible traded contracts and applies to all 
eligible market participants.
    At this time, the Exchange proposes to remove the current tier 
qualifications for Total Affiliated Member or Affiliated Entity ADV 
which is applicable to all market participants, except Market Makers. 
The Exchange would also remove the bullet point describing the 
methodology for these qualifications. The Exchange also proposes to 
amend the Total Market Maker ADV to rename the qualifications ``Total 
Customer ADV'' to reflect the new methodology by which the Exchange 
will determine eligibility for the tiers. The Exchange proposes to 
amend the bullet under Table 3 which describes Total Market Maker ADV 
to instead describe Total Customer ADV as Priority Customer Total 
Consolidated Volume divided by Customer Total Consolidated Volume.\16\ 
The Exchange defines Priority Customer Total Consolidated Volume as a 
Member's total Priority Customer volume executed on MRX in that month, 
including volume executed by Affiliated Members or Affiliated Entities. 
The Exchange also proposes to amend the numerical qualifications within 
the four tiers for Total Customer ADV so that Tier 1 requires a Member 
to execute up to 0.10%; Tier 2 requires a Member to execute more than 
0.10% and up to 0.40%; Tier 3 requires a Member to execute more than 
0.40% and up to 0.70%; and Tier 4 requires a Member to execute more 
than 0.70%. Unlike today, Members will be able to qualify for the 
pricing in Options 7, Section 3, Table 1 by the amount of Priority 
Customer Volume they execute on MRX.
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    \16\ Options 7, Section 1(c) defines ``Customer Total 
Consolidated Volume'' as the total volume cleared at The Options 
Clearing Corporation in the Customer range in equity and ETF options 
in that month. As is the case today, all eligible volume from 
Affiliated Members or an Affiliated Entity will be aggregated in 
determining applicable tiers. The ``C'' range at OCC includes both 
Priority Customer and Professional Customer volume.
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    The Exchange believes the proposed tier qualifications will 
incentivize Members to execute a greater amount of Priority Customer 
Volume on MRX in order to receive the proposed Priority Customer Taker 
Rebates for removing liquidity.
Options 7, Section 4
    The Exchange proposes to amend Options 7, Section 4, Complex Order 
Fees. The current pricing in Options 7, Section 4 applies to Complex 
Order transactions in the Complex Order Book as well as Complex Orders 
submitted into the Complex Facilitation Mechanism, Complex Solicited 
Order Mechanism, a Complex Customer Cross Order, Complex QCC Orders and 
Complex QCC with Stock Orders. Today, fees apply to an originating 
order, contra-side order and responses, as applicable, entered into 
MRX's Complex Facilitation Mechanism, Complex Solicited Order Mechanism 
and orders entered as a Complex Customer Cross Order, Complex QCC Order 
or Complex QCC with Stock Order.\17\ Also, interest on the Regular

[[Page 60949]]

Order Book that interacts with a Complex Order is subject to Regular 
Order Book fees within Options 7, Section 3 and Complex PIM Orders are 
subject to separate pricing in Options 7, Section 3.A.
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    \17\ MRX will continue to assess a Stock Handling Fee of $0.0010 
per share (capped at a maximum of $50 per trade) for the stock leg 
of Stock-Option Orders executed against other Stock-Option Orders in 
the Complex Order Book. This fee will be in addition to the above-
referenced fees for Complex Orders. See note 1 of Options 7, Section 
4.
---------------------------------------------------------------------------

    At this time the Exchange proposes to amend Options 7, Section 4 so 
that Complex Order fees apply to an originating order, contra-side 
order and both orders entered as a Complex Customer Cross Order. The 
Exchange proposes to assess Complex QCC Orders, Complex QCC with Stock 
Orders, Complex Facilitation Orders and Complex Solicited Orders the 
crossing order pricing in Options 7, Section 3, Table 2, rather than 
the pricing in Options 7, Section 4, as explained above. With this 
proposal, the Exchange would uniformly assess Complex QCC Orders and 
Complex QCC with Stock Orders the same pricing as QCC Orders and QCC 
with Stock Orders. Likewise, the Exchange would uniformly assess orders 
entered into the Complex Facilitation Mechanism and Complex Solicited 
Order Mechanism the same pricing as Regular Orders entered in the 
Facilitation Mechanism and Solicited Order Mechanism. Today, Options 7, 
Section 4 assesses a $0.35 per contract Penny Symbol to all Non-
Priority Customer Orders and an $0.85 per contract Non-Penny Symbol fee 
to all Non-Priority Customer Orders for Complex QCC Orders, Complex QCC 
with Stock Orders, Complex Facilitation Orders and Complex Solicited 
Orders. Additionally, the Exchange proposes to amend Options 7, Section 
4 to note that interest on the Regular Order Book that interacts with a 
Complex Order is subject to Regular Order Book fees within Options 7, 
Section 3, and specifically note ``Table 1.'' Also, the Exchange 
proposes to note that ``Complex Orders which are Crossing Orders are 
subject to separate pricing in Options 7, Section 3, Table 2. Complex 
PIM Orders, along with Regular PIM Orders, are subject to the pricing 
in Options 7, Section 3, A.'' The Exchange is not proposing to amend 
the Complex Order pricing in Options 7, Section 4.
    The Exchange is proposing to add a new note 3 in Options 7, Section 
4 which provides that ``Members that execute Complex Orders that trade 
with interest on the regular order book (leg) will be assessed/paid the 
applicable ``Taker'' Fee/Rebate in Options 7, Section 3, Table 1. To 
the extent that a Priority Customer Complex Order legs into the regular 
order book and executes against a Priority Customer regular order, the 
Exchange will not pay a Taker Rebate for that leg.'' The Exchange would 
not assess Priority Customers a Complex Order fee and therefore 
proposes to not pay a Taker Rebate to a Priority Customer Complex Order 
that executes against a Priority Customer leg in the order book.
    Finally, the Exchange proposes to remove the parathesis around 
notes 1 and 2 and add a period to conform the format of the numbering 
to Options 7, Section 3 numbering.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\18\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\19\ 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 any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The proposed changes are reasonable in several respects. As a 
threshold matter, the Exchange is subject to significant competitive 
forces in the market for options securities transaction services that 
constrain its pricing determinations in that market. The fact that this 
market is competitive has long been recognized by the courts. In 
NetCoalition v. Securities and Exchange Commission, 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'. . . .'' \20\
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    \20\ 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-NYSEArca-2006-
21)).
---------------------------------------------------------------------------

    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, while adopting a series of steps to improve the current market 
model, 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.'' \21\
---------------------------------------------------------------------------

    \21\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
options security transaction services. The Exchange is only one of 
seventeen options exchanges to which market participants may direct 
their order flow. Within this environment, market participants can 
freely and often do shift their order flow among the Exchange and 
competing venues in response to changes in their respective pricing 
schedules. As such, the proposal represents a reasonable attempt by the 
Exchange to increase its liquidity.
Options 7, Section 3--Table 1
    The Exchange's proposal to offer Maker Fees and Taker Fees/Rebates 
in Penny and Non-Penny Symbols in Options 7, Section 3, Table 1 is 
reasonable because the Exchange desires to incentivize market 
participants to remove Priority Customer liquidity on MRX instead of 
offering rebates to add liquidity. With this new structure, the 
Exchange would continue to assess Priority Customers no Maker Fees for 
Penny and Non-Penny Symbols to continue to encourage Members to send 
Priority Customer order flow that adds liquidity to MRX and rests on 
the order book. The Exchange proposes to begin offering Priority 
Customer Taker Rebates in Penny and Non-Penny Symbols to encourage 
Members to send Priority Customer order flow that removes liquidity 
from MRX's order book. The Exchange's proposal to pay Priority 
Customers Taker Rebates in Penny and Non-Penny Symbols is intended to 
encourage market participants to send additional Priority Customer 
orders to MRX because the proposed pricing will reward Members that 
remove Priority Customer liquidity from MRX. The Exchange proposes to 
fund these Priority Customer Taker Rebates by assessing all Non-
Priority Customers (Market Makers, Non-Nasdaq MRX Market Makers 
(FarMM), Firm Proprietary/Broker-Dealer and Professional Customers) 
uniform Non-Penny Symbol Maker Fees of $1.25 per contract. The Exchange 
would continue to assess Non-Priority Customers uniform $1.10 Non-Penny 
Symbol Taker Fees. The Exchange believes that these fees are reasonable 
because the Taker Rebates will encourage additional order flow to be 
sent to MRX with the goal of removing Priority Customer liquidity

[[Page 60950]]

and obtaining a Taker Rebate. To the extent this proposal attracts such 
order flow to MRX, all Members should benefit through more trading 
opportunities. The proposed fees are competitive with fees assessed on 
BOX Exchange LLC (``BOX''). BOX pays a $0.20 per contract Taker Rebate 
to a Public Customer in Penny Interval Classes provided the contra-
party is not another Public Customer. Additionally, BOX pays a $0.50 
per contract Taker Rebate to a Public Customer in Non-Penny Interval 
Classes provided the contra-party is not another Public Customer.\22\
---------------------------------------------------------------------------

    \22\ See BOX's Fee Schedule at Section IV.
---------------------------------------------------------------------------

    The Exchange's proposal to offer Maker Fees and Taker Fees/Rebates 
in Penny and Non-Penny Symbols is equitable and not unfairly 
discriminatory because Priority Customers would continue to not be 
assessed Penny or Non-Penny Symbol Maker Fees. Additionally, the 
proposal would pay Priority Customers Taker Rebates in Penny and Non-
Penny Symbols. Unlike other market participants, Priority Customer 
liquidity benefits all market participants by providing more trading 
opportunities, which attracts market makers. An increase in the 
activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow for other market participants, to the benefit of all market 
participants.
    The Exchange's proposal to remove the discounted fees in note 7 of 
Options 7, Section 3 in Table 1 \23\ is reasonable because the Exchange 
has amended Options 7, Section 3 in an effort to attract additional 
Priority Customer order flow to the Exchange. Additionally, the 
Exchange has amended its pricing to encourage market participants to 
remove liquidity on MRX and note 7 encouraged adding liquidity. The 
Exchange believes its proposal will create competition on MRX to 
execute against Priority Customer orders and therefore note 7 would be 
unnecessary given other changes to the pricing. The Exchange's proposal 
to remove the discounted fees in note 7 of Options 7, Section 3 in 
Table 1 is equitable and not unfairly discriminatory as no market 
participant would be entitled to the discounted fees.
---------------------------------------------------------------------------

    \23\ Members that execute Total Affiliated Member or Affiliated 
Entity Priority Customer ADV of 0.30% Customer Total Consolidated 
Volume in Regular Orders for Penny and Non-Penny Symbols which 
remove liquidity in a given month will be assessed: (1) a $0.10 per 
contract Priority Customer Taker Fee in Penny Symbols; and (2) a 
$0.20 per contract Priority Customer Taker Fee in Non-Penny Symbols. 
See note 7 of Options 7, Section 3 in Table 1.
---------------------------------------------------------------------------

    Amending the description of an ``Exposed Order'' in Options 7, 
Section 1 and conforming note 6 in Options 7, Section 6 is reasonable, 
equitable and not unfairly discriminatory because the Exchange would no 
longer pay Maker Rebates and would instead uniformly pay Priority 
Customer Taker Rebates proposed in the Pricing Schedule as proposed in 
Options 7, Section 3, Table 1.
Options 7, Section 3--Table 2
    The Exchange's proposal to amend Table 2 of Options 7, Section 3 to 
decrease the Penny Symbol Non-Priority Customer Fees for Crossing 
Orders from $0.20 per contract to $0.02 per contract for orders in the 
Facilitation Mechanism, Solicitation Mechanism and Block Orders is 
reasonable because the Exchange would be reducing the fees to enter 
orders in the Facilitation Mechanism, Solicitation Mechanism and Block 
Orders to encourage market participants to enter additional Crossing 
Orders. Additionally, the proposal to pay a Priority Customer Break-Up 
Rebate of $0.30 per contract for orders entered into the Facilitation 
Mechanism and Solicitation Mechanism will attract Priority Customer 
orders to be entered into these auctions. Applying the crossing order 
fees to orders entered in the Complex Facilitation Mechanism and 
Complex Solicitation Mechanism is reasonable because Members would pay 
the reduced fees in Options 7, Section 3, Table 2 as compared to the 
fees in Options 7, Section 4. Orders entered in the Complex 
Facilitation Mechanism and Complex Solicitation Mechanism would be 
assessed a $0.02 per contract Fee for Crossing Orders to Non-Priority 
Customers in Penny Symbols, a $0.20 per contract Fee for Crossing 
Orders to Non-Priority Customers in Non-Penny Symbols, a $0.50 Fee for 
Responses to Crossing Orders to all Members for Penny Symbols, and a 
$1.10 Fee for Responses to Crossing Orders to all Members in Non-Penny 
Symbols. Priority Customers would not pay a Fee for Crossing Orders. 
Today, Options 7, Section 4 assesses a $0.35 per contract Penny Symbol 
to all Non-Priority Customer Orders and an $0.85 per contract Non-Penny 
Symbol fee to all Members for Complex QCC Orders, Complex QCC with 
Stock Orders, Complex Facilitation Orders and Complex Solicited Orders. 
The Exchange believes that the lower Penny Symbol fees offset the 
slightly higher Non-Penny fees that would be assessed to orders entered 
in the Complex Facilitation Mechanism and Complex Solicitation 
Mechanism. This pricing along with the new Priority Customer Break-Up 
Rebate of $0.30 per contract will encourage Members to utilize the 
Complex Facilitation Mechanism and Complex Solicitation Mechanism. 
Finally, the Exchange believes it is reasonable to continue to assess 
QCC Orders and QCC with Stock Orders the same $0.20 per contract Fee 
for Crossing Orders to Non-Priority Customers in Penny and Non-Penny 
Symbols.\24\ Priority Customers would be assessed no Fee for Crossing 
Orders. The Exchange would not offer the proposed lower Penny Symbol 
Fee for Crossing Orders to these order types as the Exchange would 
continue to offer today's fees with no change. The Exchange also 
believes it is reasonable to assess Complex QCC Orders and Complex QCC 
with Stock Orders the same fee as QCC Orders and QCC with Stock Orders 
are assessed today, as compared to the pricing in Options 7, Section 4. 
As noted, the Exchange would assess Complex QCC Orders and Complex QCC 
with Stock Orders a $0.20 per contract Fee for Crossing Orders to Non-
Priority Customers in Penny and Non-Penny Symbols.\25\ Priority 
Customers would be assessed no Fee for Crossing Orders. Complex QCC 
Orders and Complex QCC with Stock Orders would be subject to the same 
pricing as Regular QCC Orders and QCC with Stock Orders. The Exchange 
believes the proposed pricing will incentivize Members to enter Complex 
QCC Orders and Complex QCC with Stock Orders on MRX.
---------------------------------------------------------------------------

    \24\ QCC Orders and QCC with Stock Orders are automatically 
executed upon entry. Responses cannot be submitted. See Options 3, 
Section 12.
    \25\ Complex QCC Orders and Complex QCC with Stock Orders are 
automatically executed upon entry. Responses cannot be submitted. 
See Options 3, Section 12.
---------------------------------------------------------------------------

    The Exchange's proposal to amend Table 2 of Options 7, Section 3 to 
decrease the Penny Symbols Non-Priority Customer Fees for Crossing 
Orders from $0.20 per contract to $0.02 per contract for orders in the 
Facilitation Mechanism, Solicitation Mechanism and Block Orders is 
equitable and not unfairly discriminatory as all market participants 
that enter orders in the Facilitation Mechanism, Solicitation Mechanism 
and Block Orders would be uniformly assessed these fees. Additionally, 
the Exchange would uniformly pay a Priority Customer Break-Up Rebate of 
$0.30 per contract for orders entered into the Facilitation Mechanism 
and Solicitation Mechanism. Applying the crossing order fees to orders 
entered in the Complex Facilitation Mechanism

[[Page 60951]]

and Complex Solicitation Mechanism is equitable and not unfairly 
discriminatory as the Exchange would uniformly apply these fees. Also, 
the pricing for orders entered in the Complex Facilitation Mechanism 
and Complex Solicitation Mechanism would be the same as pricing for 
Regular Order entered into the Facilitation Mechanism and Solicitation 
Mechanism. The Exchange is not amending the pricing for QCC Orders and 
QCC with Stock Orders. The Exchange believes it is equitable and not 
unfairly discriminatory to assess the same pricing for Complex QCC 
Orders and Complex QCC with Stock Orders as would be assessed on QCC 
Orders and QCC with Stock Orders, which fees would be uniformly 
applied.
    Amending notes 1 and 2 of Options 7, Section 3, Table 2 to add the 
words ``and Complex'' with respect to PIM Orders to make clear that all 
PIM Orders would be subject to the Part A pricing in Options 7, Section 
3 is reasonable, equitable and not unfairly discriminatory as Regular 
PIM Orders are already subject to the separate pricing in Part A below. 
There is no substantive change from today's pricing for Regular and 
Complex PIM Orders as a result of these amendments to the Pricing 
Schedule.
Options 7, Section 3--Table 3
    Amending the current tier qualifications in Table 3 of Options 7, 
Section 3 is reasonable because requiring Members to execute Total 
Customer ADV \26\ to qualify for various tiers of pricing would 
continue to attract Priority Customer volume to the Exchange and allow 
MRX Members to interact with that order flow. The Exchange continues to 
utilize heightened amounts of executions for each subsequent tier in 
Priority Customer Total Consolidated Volume to achieve the various 
fees. The Exchange believes the volume requirement at each tier level 
is reasonable. The first tier level is achievable by executing any 
amount of Priority Customer Total Consolidated Volume up to 10%. These 
levels take into account MRX's current market share and, as compared a 
more mature market,\27\ are reasonable. The Exchange believes that 
market participants will benefit from an increased amount of Priority 
Customer Volume on MRX.
---------------------------------------------------------------------------

    \26\ The Exchange proposes to amend the numerical qualifications 
within the four tiers for Total Customer ADV so that Tier 1 requires 
a Member to execute up to 0.10%; Tier 2 requires a Member to execute 
more than 0.10% and up to 0.40%; Tier 3 requires a Member to execute 
more than 0.40% and up to 0.70%; and Tier 4 requires a Member to 
execute more than 0.70%.
    \27\ See Nasdaq Phlx LLC's Customer Rebate Program Tier 
qualifications at Options 7, Section 2 for a comparison.
---------------------------------------------------------------------------

    Amending the current tier qualifications in Table 3 of Options 7, 
Section 3 is equitable and not unfairly discriminatory as the Exchange 
would uniformly apply the tier qualifications to all Members.
Options 7, Section 4
    The Exchange's proposal to amend Options 7, Section 4 so that 
Complex Order fees apply to an originating order, contra-side order and 
orders in the Complex Order book as well as a Complex Customer Cross 
Order is reasonable, equitable and not unfairly discriminatory as the 
Exchange is relocating Complex QCC Orders, Complex QCC with Stock 
Orders, Complex Facilitation Orders and Complex Solicited Orders to the 
pricing in Options 7, Section 3, Table 2, rather than the pricing in 
Options 7, Section 4. The Exchange would uniformly assess Complex QCC 
Orders, Complex QCC with Stock Orders the same pricing as QCC Orders 
and QCC with Stock Orders instead of the pricing in Options 7, Section 
4. Complex QCC Orders, Complex QCC with Stock Orders would assess Non-
Priority Customers a $0.20 per contract Fee for Crossing Orders in 
Penny and Non-Penny Symbols.\28\ Likewise, the Exchange would uniformly 
assess orders entered into the Complex Facilitation Mechanism and 
Complex Solicited Order Mechanism the same pricing as Regular Orders 
entered in the Facilitation Mechanism and Solicited Order Mechanism. 
The Exchange would assess orders entered into the Complex Facilitation 
Mechanism and Complex Solicited Order Mechanism a Non-Priority 
Customers a $0.02 per contract Fee for Crossing Orders in Penny Symbols 
and a $0.20 per contract Fee for Crossing Orders in Non-Penny Symbols 
and a $0.50 Fee for Responses to Crossing Orders to all Members for 
Penny Symbols, and a $1.10 Fee for Responses to Crossing Orders to all 
Members in Non-Penny Symbols. Additionally, the Exchange's proposal to 
amend Options 7, Section 4 to note that ``Complex Orders which are 
Crossing Orders are subject to separate pricing in Options 7, Section 
3, Table 2. Complex PIM Orders, along with Regular PIM Orders, are 
subject to the pricing in Options 7, Section 3, A'' is reasonable, 
equitable and not unfairly discriminatory as the Exchange believes the 
additional language will add clarity concerning the applicable fees all 
of which would be uniformly applied as such.
---------------------------------------------------------------------------

    \28\ QCC Orders, QCC with Stock Orders, Complex QCC Orders, and 
Complex QCC with Stock Orders are automatically executed upon entry. 
Responses cannot be submitted. See Options 3, Section 12.
---------------------------------------------------------------------------

    The Exchange's proposal to add a new note 3 in Options 7, Section 4 
which provides that ``Members that execute Complex Orders that trade 
with interest on the regular order book (leg) will be assessed/paid the 
applicable ``Taker'' Fee/Rebate in Options 7, Section 3, Table 1. To 
the extent that a Priority Customer Complex Order legs into the regular 
order book and executes against a Priority Customer regular order, the 
Exchange will not pay a Taker Rebate for that leg,'' is reasonable, 
equitable and not unfairly discriminatory as the Exchange would not 
assess Priority Customers a Complex Order fee and therefore proposes to 
not pay a Taker Rebate to a Priority Customer Complex Order that 
executes against a Priority Customer leg in the order book. Today, the 
Exchange applies the pricing in Options 7, Section 3 to the regular 
order book. This would continue to apply, except that the Taker Fee or 
Taker Rebate would apply to this pricing. The Exchange would uniformly 
assess the applicable pricing, Regular order book or Complex Order 
book, to the order.

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.
Options 7, Section 3--Table 1
    In terms of intra-market competition, the Exchange's proposal to 
offer Maker Fees and Taker Fees/Rebates in Penny and Non-Penny Symbols 
does not impose an undue burden on competition. Priority Customers are 
not assessed Penny or Non-Penny Symbol Maker Fees. Additionally, the 
proposal pays Priority Customers Taker Rebates in Penny and Non-Penny 
Symbols, unlike other market participants, and assesses Priority 
Customers the same or lower Taker Fees in Non-Penny Symbols as compared 
to other market participants. Priority Customer liquidity benefits all 
market participants by providing more trading opportunities, which 
attracts market makers. An increase in the activity of these market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow for other market 
participants, to the benefit of all market participants.
    The Exchange's proposal to remove the discounted fees in note 7 of 
Options 7, Section 3 in Table 1 does not impose

[[Page 60952]]

an undue burden on competition as no market participant would be 
entitled to the discounted fees.
    Amending the description of an ``Exposed Order'' in Options 7, 
Section 1 and conforming note 6 in Options 7, Section 6 does not impose 
an undue burden on competition because the Exchange would no longer pay 
Maker Rebates and would uniformly pay Taker Rebates where proposed in 
the Pricing Schedule at Options 7, Section 3, Table 1.
Options 7, Section 3--Table 2
    In terms of intra-market competition, the Exchange's proposal to 
amend Table 2 of Options 7, Section 3 to decrease the Penny Symbol Non-
Priority Customer Fees for Crossing Orders from $0.20 per contract to 
$0.02 per contract for orders in the Facilitation Mechanism, 
Solicitation Mechanism and Block Orders does not impose an undue burden 
on competition as all market participants that enter orders in the 
Facilitation Mechanism, Solicitation Mechanism and Block Orders would 
be uniformly assessed these fees. Assessing lower Penny Symbol Non-
Priority Customer Fees for Crossing Orders and not lowering the Penny 
Symbol Non-Priority Customer Responses for Crossing Orders does not 
impose an undue burden on competition.
    Today, a differential exists as between the Fees for Crossing 
Orders (the fees that apply to the originating and contra-side orders) 
and the Responses for Crossing Orders, the Exchange does not believe 
that widening this differential burdens competition because lowering 
these originating and contra-side order fees encourages Members to 
initiate Facilitation Mechanisms, Complex Facilitation Mechanisms, 
Solicitation Mechanisms, Complex Solicitation Mechanisms and Block 
Orders in Penny Symbols. Members responding to these auctions would 
continue to be assessed $0.50 per contract. While this fee is higher 
than the proposed fee of $0.35 per contract to remove liquidity from 
the order book, the Exchange believes the fee remains competitive with 
other options exchanges \29\ and will continue to encourage Members to 
initiate Facilitation Mechanisms, Complex Facilitation Mechanisms, 
Solicitation Mechanisms, Complex Solicitation Mechanisms and Block 
Orders in Penny Symbols. The liquidity the Exchange is able to attract 
to MRX in the form of these auctions provides other Members an 
opportunity to engage with auction orders and participate in the trade 
by breaking-up the auction order or being allocated in the auction. 
Members would not be able to respond to the auctions if such auctions 
never commence.
---------------------------------------------------------------------------

    \29\ Miami International Securities Exchange, LLC (``MIAX'') 
assesses a $0.50 per contract Penny Class Responder to PRIME Auction 
Fee. See MIAX's Fee Schedule. Nasdaq ISE, LLC (``ISE'') assesses a 
$0.50 per contract Fee for Responses to Facilitation Orders, 
Solicited Orders and Block Orders. See ISE's Pricing Schedule.
---------------------------------------------------------------------------

    Additionally, the Exchange would uniformly pay a Priority Customer 
Break-Up Rebate of $0.30 per contract for orders entered into the 
Facilitation Mechanism and Solicitation Mechanism. The Exchange 
believes that offering a Break-Up Rebate only to a Priority Customer, 
and not other market participants, would not cause an undue burden on 
competition because Priority Customer originating order flow from the 
Facilitation Mechanism and Solicitation Mechanism enhances liquidity on 
the Exchange. This, in turn, provides more trading opportunities and 
attracts other market participants, thus facilitating tighter spreads, 
increased order flow and trading opportunities to the benefit of all 
market participants. Moreover, the Exchange does not assess Priority 
Customers a Fee for Penny or Non-Penny orders entered into the 
Facilitation Mechanism and Solicitation Mechanism to attract such order 
flow.
    Applying the crossing order fees to orders entered in the Complex 
Facilitation Mechanism and Complex Solicitation Mechanism does not 
impose an undue burden on competition as the Exchange would uniformly 
apply these fees. Also, the pricing for orders entered in the Complex 
Facilitation Mechanism and Complex Solicitation Mechanism would be the 
same as pricing for Regular Order entered into the Facilitation 
Mechanism and Solicitation Mechanism. The Exchange is not amending the 
pricing for QCC Orders and QCC with Stock Orders. The Exchange believes 
assess the same pricing for Complex QCC Orders and Complex QCC with 
Stock Orders as would be assessed on QCC Orders and QCC with Stock 
Orders does not impose an undue burden on competition because these 
fees would be uniformly applied. Priority Customer orders would 
continue to be assess no Fee for Crossing Orders.
    Amending notes 1 and 2 of Options 7, Section 3, Table 2 to add the 
words ``and Complex'' with respect to PIM Orders to make clear that all 
PIM Orders would be subject to the Part A pricing in Options 7, Section 
3 does not impose an undue burden on competition as Regular PIM Orders 
are already subject to the separate pricing in Part A below. There is 
no substantive change from today's pricing for Regular and Complex PIM 
Orders as a result of these amendments to the Pricing Schedule.
Options 7, Section 3--Table 3
    In terms of intra-market competition, amending the current tier 
qualifications in Table 3 of Options 7, Section 3 does not impose an 
undue burden on competition as the Exchange would uniformly apply the 
tier qualifications to all Members.
Options 7, Section 4
    In terms of intra-market competition, the Exchange's proposal to 
amend Options 7, Section 4 so that Complex Order fees apply to an 
originating order, contra-side order and orders in the Complex Order 
book as well as a Complex Customer Cross Order does not impose an undue 
burden on competition because the Exchange would uniformly assess 
Complex QCC Orders, Complex QCC with Stock Orders the same pricing as 
QCC Orders and QCC with Stock Orders. Likewise, the Exchange would 
uniformly assess orders entered into the Complex Facilitation Mechanism 
and Complex Solicited Order Mechanism the same pricing as Regular 
Orders entered in the Facilitation Mechanism and Solicited Order 
Mechanism. Additionally, the Exchange's proposal to amend Options 7, 
Section 4 to note that ``Complex Orders which are Crossing Orders are 
subject to separate pricing in Options 7, Section 3, Table 2. Complex 
PIM Orders, along with Regular PIM Orders, are subject to the pricing 
in Options 7, Section 3, A'' does not impose an undue burden on 
competition as the Exchange would uniformly apply the pricing as noted 
herein.
    The Exchange's proposal to add a new note 3 in Options 7, Section 4 
which provides that ``Members that execute Complex Orders that trade 
with interest on the regular order book (leg) will be assessed/paid the 
applicable ``Taker'' Fee/Rebate in Options 7, Section 3, Table 1. To 
the extent that a Priority Customer Complex Order legs into the regular 
order book and executes against a Priority Customer regular order, the 
Exchange will not pay a Taker Rebate for that leg,'' does not impose an 
undue burden on competition as the Exchange would uniformly assess the 
applicable pricing, Regular order book or Complex Order book to the 
order.
    In terms of inter-market competition, the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more

[[Page 60953]]

favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other options exchanges. Because 
competitors are free to modify their own fees in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.

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

    No written comments were either solicited or 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.\30\ 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: (i) necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) 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.
---------------------------------------------------------------------------

    \30\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-MRX-2024-25 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-MRX-2024-25. 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-MRX-2024-25 and should be 
submitted on or before August 19, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-16547 Filed 7-26-24; 8:45 am]
BILLING CODE 8011-01-P