[Federal Register Volume 89, Number 148 (Thursday, August 1, 2024)]
[Notices]
[Pages 62818-62821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16938]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100607; File No. SR-MRX-2024-29]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend MRX 
Options 7, Section 3

July 26, 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 24, 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 July 15, 2024, the Exchange withdrew SR-MRX-2024-20 and 
replaced it with SR-MRX-2024-26. On July 24, 2024, the Exchange 
withdrew SR-MRX-2024-26 and replaced it with this filing.
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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, 
Section 3, Table 2 related to Crossing Orders. Specifically, the 
Exchange proposes to amend the Regular and Complex Order Non-Penny 
Symbol Fees for Crossing Orders.\4\
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    \4\ 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).
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Options 7, Section 3--Table 2
    Today, Options 7, Section 3, Table 2 applies to Regular and Complex 
Crossing Orders. Today, the Exchange assesses the following Regular and 
Complex Crossing Order Fees in Penny and Non-Penny Symbols: \5\
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    \5\ Footnotes in the Pricing Schedule are not displayed in this 
table.

[[Page 62819]]



                                       Regular and Complex Crossing Orders
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                                                                                                Break-up rebate
                                                                Fee for     Fee for responses   for facilitation
                    Market participant                         crossing        to crossing       mechanism and
                                                                orders            orders        solicited order
                                                                                                   mechanism
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                                                  Penny Symbols
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Market Maker..............................................           $0.02              $0.50                N/A
Non-Nasdaq MRX Market Maker (FarMM).......................            0.02               0.50                N/A
Firm Proprietary/Broker-Dealer............................            0.02               0.50                N/A
Professional Customer.....................................            0.02               0.50                N/A
Priority Customer.........................................            0.00               0.50             (0.30)
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                                                Non-Penny Symbols
----------------------------------------------------------------------------------------------------------------
Market Maker..............................................            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
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    At this time, the Exchange proposes to amend Table 2 of Options 7, 
Section 3 to decrease the Non-Penny Symbol Non-Priority Customer \6\ 
Fees for Crossing Orders from $0.20 to $0.02 per contract for orders in 
the Facilitation Mechanism,\7\ Complex Facilitation Mechanism,\8\ 
Solicitation Mechanism,\9\ Complex Solicitation Mechanism \10\ and 
Block Orders.\11\ A Priority Customer would continue to be assessed no 
Regular and Complex Order Fee for Crossing Orders in Non-Penny Symbols.
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    \6\ ``Non-Priority Customers'' include Market Makers, Non-Nasdaq 
GEMX Market Makers (FarMMs), Firm Proprietary/Broker-Dealers, and 
Professional Customers. See Options 7, Section 1(c).
    \7\ The Facilitation Mechanism is described in Options 3, 
Section 11(b).
    \8\ The Facilitation Mechanism is described in Options 3, 
Section 11(c).
    \9\ The Solicitation Mechanism is described in Options 3, 
Section 11(d).
    \10\ The Solicitation Mechanism is described in Options 3, 
Section 11(e).
    \11\ Block Orders are single-leg orders in single-sided 
auctions. See Options 3, Section 11(a).
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    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 separate pricing in Part 
A of Options 7, Section 3.
    The Exchange believes that lowering the Regular and Complex Non-
Priority Customer Fees for Crossing Orders in Non-Penny Symbols will 
attract additional Crossing Orders to MRX.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4) and (5).
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    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'. . . .'' \14\
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    \14\ 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)).
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    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.'' \15\
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    \15\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    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 2
    The Exchange's proposal to amend Table 2 of Options 7, Section 3 to 
decrease the Regular and Complex Non-Priority Customer Fees for 
Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract 
for orders in the Facilitation Mechanism, Complex

[[Page 62820]]

Facilitation Mechanism, Solicitation Mechanism, Complex Solicitation 
Mechanism and Block Orders is reasonable because the Exchange would be 
reducing the originating and contra-side order fees to enter orders in 
these auction mechanisms to encourage market participants to enter 
additional Crossing Orders on MRX. The Exchange would continue to 
assess no Regular and Complex Order Non-Penny Symbol Priority Customer 
Fee for Crossing Orders.
    The Exchange's proposal to amend Table 2 of Options 7, Section 3 to 
decrease the Regular and Complex Non-Priority Customer Fees for 
Crossing Orders in Non-Penny Symbols from $0.20 to $0.02 per contract 
for orders in the Facilitation Mechanism, Complex Facilitation 
Mechanism, Solicitation Mechanism, Complex Solicitation Mechanism and 
Block Orders is equitable and not unfairly discriminatory as all Non-
Priority Customers that enter orders in the Facilitation Mechanism, 
Complex Facilitation Mechanism, Solicitation Mechanism, Complex 
Solicitation Mechanism and Block Orders would be uniformly assessed 
these lower Non-Penny Symbol fees. A Priority Customer would continue 
to be assessed no Regular and Complex Order Fee for Crossing Orders in 
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.

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 2
    In terms of intra-market competition, the Exchange's proposal to 
amend Table 2 of Options 7, Section 3 to decrease the Regular and 
Complex Non-Priority Customer Fees for Crossing Orders in Non-Penny 
Symbols from $0.20 to $0.02 per contract for orders in the Facilitation 
Mechanism, Complex Facilitation Mechanism, Solicitation Mechanism, 
Complex Solicitation Mechanism and Block Orders does not impose an 
undue burden on competition as all Non-Priority Customers that enter 
orders in the Facilitation Mechanism, Complex Facilitation Mechanism, 
Solicitation Mechanism, Complex Solicitation Mechanism and Block Orders 
would be uniformly assessed these lower Non-Penny Symbol fees. 
Assessing lower Non-Penny Symbol Non-Priority Customer Fees for 
Crossing Orders and not lowering the Non-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 Non-Penny Symbols. Members responding to these auctions would 
continue to be assessed $1.10 per contract Non-Penny Symbol fee, which 
is the same fee assessed today for Members removing liquidity from the 
order book. The Exchange would continue to assess Members the same fees 
to remove liquidity whether they are removing that liquidity from the 
order book or one of the aforementioned auctions. 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.
    A Priority Customer would continue to be assessed no Regular and 
Complex Order Fee for Crossing Orders in 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.
    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 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.\16\ 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.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-MRX-2024-29 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-2024-29. 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

[[Page 62821]]

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-2024-29 and should be submitted on 
or before August 22, 2024.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-16938 Filed 7-31-24; 8:45 am]
BILLING CODE 8011-01-P