[Federal Register Volume 91, Number 12 (Tuesday, January 20, 2026)]
[Notices]
[Pages 2393-2396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-00918]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104608; File No. SR-MEMX-2025-36]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule To Extend the Sunset Provision Related to the
Options Regulatory Fee (ORF)
January 14, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on December 31, 2025, MEMX LLC (``MEMX'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 2394]]
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\ and non-
Members of the Exchange (the ``Fee Schedule'') pursuant to Exchange
Rules 15.1(a) and (c) to extend the current sunset date of December 31,
2025 applicable to the Options Regulatory Fee (``ORF'') to June 30,
2026. The Exchange proposes to implement the changes to the Fee
Schedule pursuant to this proposal on January 1, 2026. The text of the
proposed rule change is provided in Exhibit 5.
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\3\ See Exchange Rule 1.5(p).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its Options Fee Schedule related to
the ORF to extend the current sunset date of December 31, 2025 to June
30, 2026, and thus continue charging the previously established ORF in
the amount of $0.0015 per contract side through June 30, 2026. As
discussed herein, the ORF sunset date was initially proposed to provide
time for the Exchange to discuss alternative ORF models with its
Members. At this point, alternative models are continuing to be pursued
among industry participants, and other exchanges have recently filed
proposals with the Commission that propose modified ORF assessment and
collection methodologies.\4\ The Exchange is committed to switching to
a new, unified model as soon as a consistent framework has been
established by the Commission, adopted by all the options exchanges,
and necessary regulatory filings submitted. Thus, while the Exchange
continues to engage in the process surrounding ORF reform, it is
necessary to continue to fund its regulatory program via the ORF so
that it may operate on equal footing with each of the seventeen (17)
other options exchanges that charge similar regulatory fees in amounts
that exceed the relatively modest amounts collected by the Exchange.
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\4\ Proposals have been filed by each of the four options
markets operated by Cboe Exchange, Inc. (collectively, the ``Cboe
Proposals''); see, e.g., Securities Exchange Act Release No. 104403
(December 15, 2025) (SR-CboeBZX-2025-157) (Notice of filing and
immediate effectiveness of a proposed rule change to adopt a new
methodology for assessment and collection of the Options Regulatory
Fee (ORF)).
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The ORF is designed to recover a material portion of the costs to
the Exchange of the supervision and regulation of Members' customer
options business, including performing routine surveillances and
investigations, as well as policy, rulemaking, interpretive and
enforcement activities. The Exchange believes that revenue generated
from the ORF, when combined with all of the Exchange's other regulatory
fees and fines, will cover a material portion, but not all, of the
Exchange's regulatory costs. Currently, all other registered options
exchanges impose ORF on their members, and those exchanges also charge
ORF for executions occurring on MEMX Options cleared by their
customers.\5\
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\5\ See Securities Exchange Act Release Nos. 58817 (October 20,
2008), 73 FR 63744 (October 27, 2008) (SR-CBOE-2008-05) (notice of
filing and immediate effectiveness of Cboe Exchange, Inc. (``Cboe'')
adopting an ORF applicable to transactions across all options
exchanges) 61133 (December 9, 2009), 74 FR 66715 (December 16, 2009)
(SR-Phlx-2009-100) (notice of filing and immediate effectiveness of
Nasdaq PHLX LLC (``Phlx'') adopting an ORF applicable to
transactions across all options exchanges); 61154 (December 11,
2009), 74 FR 67278 (December 18, 2009) (SR-ISE-2009-105) (notice of
filing and immediate effectiveness of Nasdaq ISE, LLC (``ISE'')
adopting an ORF applicable to transactions across all options
exchanges); 61388 (January 20, 2010), 75 FR 4431 (January 27, 2010)
(SR-BX-2010-001) (notice of filing and immediate effectiveness of
Nasdaq OMX BX, Inc. (``BX'') adopting an ORF applicable to
transactions across all options exchanges); 70200 (August 14, 2013)
78 FR 51242 (August 20, 2013) (SR-Topaz-2013-01)) (notice of filing
and immediate effectiveness of Nasdaq GEMX, LLC (``GEMX''), formerly
known as ISE Gemini and Topaz Exchange, adopting an ORF applicable
to transactions across all options exchanges); 64400 (May 4, 2011),
76 FR 27118 (May 10, 2011) (SR-NYSEAmex-2011-27) (notice of filing
and immediate effectiveness of NYSE Amex LLC (``NYSE AMEX'')
adopting an ORF applicable to transactions across all options
exchanges); 64399 (May 4, 2011), 76 FR 27114 (May 10, 2011) (SR-
NYSEArca-2011-20) (notice of filing and immediate effectiveness of
NYSE Arca, Inc. (``NYSE Arca'') adopting an ORF applicable to
transactions across all options exchanges); 65913 (December 8,
2011), 76 FR 77883 (December 14, 2011) (SR-NASDAQ-2011-163) (notice
of filing and immediate effectiveness of Nasdaq Options Market
(``NOM'') adopting an ORF applicable to transactions across all
options exchanges); 66979 (May 14, 2012), 77 FR 29740 (May 18, 2012)
(SR-BOX-2012-002) (notice of filing and immediate effectiveness of
BOX Options Exchange LLC (``BOX'') adopting an ORF applicable to
transactions across all options exchanges); 67596 (August 6, 2012),
77 FR 47902 (August 10, 2012) (SR-C2-2012-023) (notice of filing and
immediate effectiveness of C2 Options Exchange, Inc. (``C2'')
adopting an ORF applicable to transactions across all options
exchanges); 68711 (January 23, 2013) 78 FR 6155 (January 29, 2013)
(SR-MIAX-2013-01) (notice of filing and immediate effectiveness of
Miami International Securities Exchange LLC (``MIAX'') adopting an
ORF applicable to transactions across all options exchanges); 74214
(February 5, 2015), 80 FR 7665 (February 11, 2015) (SR-BATS-2015-08)
(notice of filing and immediate effectiveness of Cboe BZX Exchange,
Inc. (``BZX'') formerly known as BATS, adopting an ORF applicable to
transactions across all options exchanges); 80025 (February 13,
2017) 82 FR 11081 (February 17, 2017) (SR-BatsEDGX-2017-04) (notice
of filing and immediate effectiveness of Cboe EDGX Exchange, Inc.
(``EDGX'') formerly known as Bats EDGX Exchange, Inc., adopting an
ORF applicable to transactions across all options exchanges); 80875
(June 7, 2017) 82 FR 27096 (June 13, 2017) (SR-PEARL-2017-26)
(notice of filing and immediate effectiveness of MIAX Pearl, LLC
(``MIAX Pearl'') adopting an ORF applicable to transactions across
all options exchanges); 85127 (February 13, 2019) 84 FR 5173
(February 20, 2019) (SR-MRX-2019-03) (notice of filing and immediate
effectiveness of Nasdaq MRX, LLC (``MRX'') adopting an ORF
applicable to transactions across all options exchanges); 85251
(March 6, 2019) 84 FR 8931 (March 12, 2019) (SR-EMERALD-2019-01)
(notice of filing and immediate effectiveness of MIAX Emerald LLC
(``MIAX Emerald'') adopting an ORF applicable to transactions across
all options exchanges); 100924 (August 27, 2024) 89 FR 71496
(September 3, 2024) (notice of filing and immediate effective of
MIAX Sapphire LLC (``MIAX Sapphire'') adopting an ORF applicable to
transactions across all options exchanges).
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The Exchange notes that in 2019, the Commission issued suspensions
of and orders instituting proceedings to determine whether to approve
or disapprove a proposed rule change to modify the Options Regulatory
Fee of NYSE American, NYSE Arca, MIAX, MIAX Pearl, MIAX Emerald, Cboe,
Cboe EDGX Options, and C2.\6\ Each of those exchanges had filed to
increase their ORF, and the Commission indicated that each of those
filings lacked detail and specificity, signaling that more information
was needed to speak to
[[Page 2395]]
whether the proposed increased ORFs were reasonable, equitably
allocated and not unfairly discriminatory, particularly given that the
ORF is assessed on transactions that clear in the ``customer'' range
and regardless of the exchange on which the transaction occurs. The
Commission also noted that the filings provided only broad general
statements regarding options transaction volume and did not provide any
information on those exchanges' historic or projected options
regulatory costs (including the costs of regulating activity that
cleared in the ``customer'' range and the costs of regulating activity
that occurred off exchange), the amount of regulatory revenue they had
generated and expected to generate from the ORF as well as other
sources, or the ``material portion'' of options regulatory expenses
that they sought to recover from the ORF. Each of those exchanges
withdrew their filings, but continue charging ORF today as discussed
above. Since that time, MEMX Options launched and commenced operations
and as noted previously, its initial ORF filing was also suspended.\7\
Unlike its competitors noted above, however, the Exchange did not have
a previously implemented ORF to continue charging notwithstanding said
suspensions. As such, the Exchange proposed to establish an ORF but has
maintained a sunset date, in order to allow it time to inform its
approach to the ORF moving forward.
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\6\ See Securities Exchange Act Release No. 87168 (September 30,
2019), 84 FR 53210 (October 4, 2019) (SR-Emerald-2019-29);
Securities Exchange Act Release No. 87167 (September 30, 2019), 84
FR 53189 (October 4, 2019) (SR-PEARL-2019-23); Securities Exchange
Act Release No. 87169 (September 30, 2019), 84 FR 53195 (October 4,
2019) (SR-MIAX-2019-35); Securities Exchange Act Release No. 87170
(September 30, 2019), 84 FR 53213 (October 4, 2019) (SR-CBOE-2019-
040); Securities Exchange Act Release No. 87172 (September 30, 2019)
84 FR 53192 (October 4, 2019) (SR-CboeEDGX-2019-051); Securities
Exchange Act Release No 87171 (September 30, 2019), 84 FR 53200
(October 4, 2019) (SR-C2-2019-018); Securities Exchange Act Release
No. 86832 (August 30, 2019), 84 FR 46980 (September 6, 2019) (SR-
NYSEArca-2019-49); Securities Exchange Act Release No. 86833 (August
30, 2019) 84 FR 47029 (September 6, 2019) (SR-NYSEAMER-2019-27).
\7\ See Securities Exchange Act Release No. 98585 (September 28,
2023), 88 FR 68692 (October 4, 2023) (SR-MEMX-2023-25).
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As previously noted, the Exchange appreciates the evolving changes
in the market and regulatory environment and, in connection with
industry and other feedback, is continuing to evaluate the current
methodologies and practices for the assessment and collection of ORF.
If during the proposed sunset period of January 1, 2026 through June
30, 2026, a viable alternative methodology for the ORF presents itself,
the Exchange would endeavor to implement said alternative prior to the
proposed sunset date. In other words, the existence of the sunset date
of June 30, 2026 for the Exchange's current ORF would not preclude the
Exchange from filing to modify its ORF methodology prior to that date,
if applicable.
Until that time, the Exchange believes it is reasonable,
appropriate and fair to fund a portion of its regulatory program
through the same regulatory fee charged by every other options
exchange. Further, the Exchange emphasizes that other exchanges will be
charging ORF for transactions occurring on MEMX Options, and as such,
it follows that the Exchange that is primarily responsible for
monitoring those transactions should also be able to charge the ORF for
activity occurring on its own market, as well as transactions it
surveils on away markets.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(4) of the Act \9\ in particular, in that
it is an equitable allocation of reasonable dues, fees, and other
charges among its members and issuers and other persons using its
facilities. The Exchange also believes the proposal furthers the
objectives of Section 6(b)(5) of the Act \10\ in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customers, issuers, brokers and dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C. 78f(b)(5).
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The ORF is designed to recover a material portion of the costs of
supervising and regulating Members' customer options business including
performing routine surveillances and investigations, as well as policy,
rulemaking, interpretive, and enforcement activities. Extending the
current ORF sunset date is reasonable because continued collection of
ORF will serve to balance the Exchange's regulatory revenue against the
anticipated regulatory costs, thereby ensuring proper regulatory
funding. Moreover, the Exchange's ORF rate is significantly lower than
the amount of ORF assessed by other exchange groups.\11\
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\11\ See, e.g., Cboe Options Fee Schedule, which provides an ORF
rate of $0.0023 per contract that will sunset on December 31, 2025,
at which point it will revert to a rate of $0.0017 per contract, BOX
Options Fee Schedule Section II(C), which provides an ORF rate of
$0.00295 per contract, MIAX Options Fee Schedule, Section 2(b),
which provides an ORF rate of $0.0015 per contract until January
2026, when it will increase to $0.0017 per contract.
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The Exchange notes that while certain individual options exchanges
do charge a lower ORF than that currently charged by the Exchange, each
of these options exchanges is part of an exchange ``group'' (i.e.,
affiliated with other options exchanges). In turn, each of these
exchange groups charges more than three (3) to four (4) times the
amount of ORF as a group when compared to the Exchange's ORF rate.\12\
While each additional options exchange is its own legal entity with
regulatory obligations under the Act to regulate its members, there is
significant scale that can be achieved for an exchange group that
operates multiple exchanges, including with respect to regulation, and
this scale allows such options exchanges to operate with a lower
assessment of ORF. In other words, the initial fixed costs associated
with implementing an exchange group's options regulatory program are
scalable as additional options exchanges are launched by that exchange
group.
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\12\ Each of NYSE Arca Options, NYSE American Options, MIAX
Pearl, MIAX Emerald, MIAX Sapphire, Cboe BZX Options, Cboe C2
Options, Cboe EDGX Options, Nasdaq Options Exchange, Nasdaq MRX
Options, Nasdaq GEMX Options, Nasdaq PHLX Options, Nasdaq ISE
Options, and Nasdaq BX Options, currently charges a lower rate than
$0.0015 per contract, which is the rate proposed by the Exchange.
However, the NYSE exchanges, comprised of two options exchanges, are
currently waiving their ORF of $0.0023 per contract until December
31, 2025, and in January 2026 each of their ORFs will increase to
$0.0026 per contract, resulting in an aggregate ORF rate of $0.0052
per contract (over three times the Exchange's current rate).
Additionally, the Cboe exchanges, comprised of four options
exchanges, charge an aggregate ORF rate of $0.0027 per contract
(more than the Exchange's current rate), the MIAX exchanges,
comprised of four options exchanges, charge an aggregate ORF rate of
$0.0048 per contract (nearly three times the Exchange's current
rate) and in January 2026 their aggregate ORF rate will increase to
$0.0052 per contract; and the Nasdaq exchanges, comprised of six
options exchanges, charge an aggregate ORF rate of $0.00215 per
contract, which beginning January 1 2026, will also increase
significantly, to $0.0829 per contract, and starting in February
2026, will decrease to $0.0063 per contract (over four times the
Exchange's current rate).
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Extending the sunset date is also reasonable because doing so would
allow the Exchange to recoup a portion of its regulatory expenses via
the ORF as other options exchanges do. If the Exchange were not allowed
to charge an ORF, then after the current sunset date of December 31,
2025, it would be forced to pay for its regulatory program solely out
of business revenues while working towards an alternative ORF solution,
unlike every other competing exchange, each of which would continue to
assess an ORF, including on transactions executed on MEMX Options. This
would impact MEMX's ability to assure adequate funding of its
regulatory program.
Extending the ORF sunset date to June 30, 2026, is also equitable
and not unfairly discriminatory because prior to the proposed sunset
date, the ORF would continue to be objectively allocated to Members in
a manner that is consistent with the ORF currently imposed by the other
seventeen (17) options exchanges. The Exchange will
[[Page 2396]]
continue to monitor the amount of revenue collected from the ORF to
ensure that it, in combination with its other regulatory fees and
fines, does not exceed the Exchange's total regulatory costs. The
Exchange has designed the ORF to generate revenues that, when combined
with all of the Exchange's other regulatory fees, will be less than 75%
of the Exchange's regulatory costs, which is consistent with the
Exchange's limited liability company agreement that states in Section
17.4(b): ``[a]ny Regulatory Funds shall not be used for non-regulatory
purposes or distributed, advanced or allocated to any Company Member,
but rather, shall be applied to fund regulatory operations of the
Company (including surveillance and enforcement activities) . . .''
\13\
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\13\ See MEMX LLC--LLC Agreement at https://info.memxtrading.com/regulation/governance/.
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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 that is not necessary or appropriate
in furtherance of the purposes of the Act. This proposal will not
create an unnecessary or inappropriate intra-market burden on
competition because the Exchange's ORF is designed to enable the
Exchange to recover a material portion of the Exchange's cost related
to its regulatory activities. This proposal will not create an
unnecessary or inappropriate inter-market burden on competition because
it will be a regulatory fee that supports regulation and customer
protection in furtherance of the purposes of the Act. The Exchange is
obligated to ensure that the amount of regulatory revenue collected
from the ORF, in combination with its other regulatory fees and fines,
does not exceed regulatory costs.
The Exchange's ORF, as described herein, is lower than or
comparable to fees charged by other options exchanges (though as noted
above, some exchange groups do have options exchanges operating with a
lower ORF on a standalone basis).
The Exchange notes that while it does not believe that its ORF will
impose any burden on inter-market competition, the Exchange being
precluded from charging an ORF after December 31, 2025, while other
options exchanges are permitted to continue to charge ORF would, in-
fact, significantly burden the Exchange's ability to assure adequate
funding of its regulatory program. As noted above, the Exchange is a
new entrant in the highly competitive environment for equity options
trading. As also noted above, all seventeen (17) other registered
options exchanges currently impose the ORF on their members, and such
ORF fees imposed by other options exchanges currently do and will
continue to extend to executions occurring on the Exchange. The
Exchange notes that it is not precluded from adopting an alternative
model during the proposed sunset period, however, while alternative ORF
models are in development, in order to be treated similarly to these
other exchanges, it must, in fact, impose an ORF on its Members during
this period, and the inability to do so would result in an unfair
disadvantage to the Exchange.
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 \14\ and Rule 19b-4(f)(2) \15\ thereunder.
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\14\ 15 U.S.C. 78s(b)(3)(A)(ii).
\15\ 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-2025-36 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-2025-36. 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 filing 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-2025-36 and should be submitted on
or before February 10, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-00918 Filed 1-16-26; 8:45 am]
BILLING CODE 8011-01-P