
[Federal Register Volume 78, Number 113 (Wednesday, June 12, 2013)]
[Notices]
[Pages 35349-35351]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13897]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69710; File No. SR-MIAX-2013-26]


Self-Regulatory Organizations; Miami International Securities 
Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend the MIAX Fee Schedule

June 6, 2013.
    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 May 30, 2013, Miami International Securities Exchange LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend its Fee Schedule.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.miaxoptions.com/filter/wotitle/rule_filing, at 
MIAX's principal office, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to waive all transaction fees in Section 
1(a)(i) of the MIAX Options Fee Schedule that apply to Market Makers 
\3\ registered on the Exchange for the period beginning June 3, 2013 
and ending July 31, 2013.\4\ Specifically, during this period, the 
Exchange will waive the following transaction fees: (i) RMMs $0.23 per 
contract for standard options or $0.023 for Mini Options; (ii) LMMs 
$0.20 per contract for standard options or $0.020 for Mini Options; 
(iii) DLMMs and PLMMs $0.18 per contract for standard options or $0.018 
for Mini Options; and (iv) DPLMMs $0.16 per contract for standard 
options or $0.016 for Mini Options.\5\
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    \3\ Market Makers may be registered as a Lead Market Maker or as 
a Registered Market Maker. See Exchange Rule 600(b). Market Makers 
registered on the Exchange for purposes of the transaction fee 
waiver and Section 1(a)(i) of the Fee Schedule include: (i) 
Registered Market Maker (``RMM''); (ii) Lead Market Maker (``LMM''); 
(iii) Directed Order Lead Market Maker (``DLMM''); (iv) Primary Lead 
Market Maker (``PLMM''); and Directed Order Primary Lead Market 
Maker (``DPLMM''). See MIAX Options Fee Schedule, Section 1(a)(i)--
Market Maker Transaction Fees.
    \4\ The fee waiver will only apply to Market Maker transaction 
fees in Section 1(a)(i) of the MIAX Options Fee Schedule. See MIAX 
Options Fee Schedule, Section 1(a)(i)--Market Maker Transaction 
Fees. The Exchange notes that the proposal will have no effect on 
other fees and dues that may apply to Market Makers including 
marketing fees, Options Regulatory Fees, market data, and membership 
application fees. At the end of the period, Market Maker Transaction 
Fees will return to the prior fee rates unless the Exchange files 
another 19b-4 Rule Filing to amend its fees.
    \5\ See MIAX Options Fee Schedule, Section 1(a)(i)--Market Maker 
Transaction Fees.
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    The proposed fee waiver is designed to both enhance the Exchange's 
competitiveness with other option exchanges and strengthen its market 
quality. The Exchange believes that the proposed change would increase 
both intermarket and intramarket competition by incenting market 
participants and market makers on other exchanges to register as Market 
Makers on the Exchange. In addition, the Exchange believes that waiving 
transaction fees for Market Makers registered on the Exchange will 
promote tighter bid-ask spreads by Market Makers, and increase the 
volume of transactions in order to allow the Exchange to compete more 
effectively with other options exchanges for such transactions.
    The Exchange notes that, while the proposal is not based on that of 
another exchange, that fee waivers are often used by exchanges to 
increase their competitiveness.\6\
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    \6\ See e.g., Securities Exchange Act Release Nos. 66427 
(February 21, 2012), 77 FR 11608 (February 27, 2012) (SR-BATS-2012-
011); 65007 (August 2, 2011), 76 FR 48190 (August 8, 2011) (SR-CBOE-
2011-071); 56862 (November 29, 2007), 72 FR 68918 (December 6, 2007) 
(SR-CBOE-2007-135); 55833 (May 31, 2007), 72 FR 31358 (June 6, 2007) 
(SR-ISE-2007-28).
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    The proposed rule change will take effect on June 3, 2013.
Technical Change
    In addition to the changes above, the Exchange proposes a technical 
change to the Fee Schedule to delete an obsolete date. Specifically, 
the Exchange proposes to delete the language ``Effective April 17, 
2013'' from the heading in Section 1 of the Fee Schedule. The Exchange 
believes that including this date in the Fee Schedule in this location 
is unnecessary going forward.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \7\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \8\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fee waiver is fair, 
equitable and not unreasonably discriminatory. The proposed fee waiver 
is reasonable because it waives transaction fees for a limited period 
in order to enable the Exchange to improve its overall competitiveness 
and strengthen its market quality for all market participants. The 
proposed fee waiver is fair and equitable and not unreasonably 
discriminatory because it will apply equally to all Market Makers. All 
similarly situated Market Makers are subject to the same fee waiver, 
and access to the Exchange is offered on

[[Page 35350]]

terms that are not unfairly discriminatory. The registration as an 
Exchange Market Maker is equally available to all market participants 
and Electronic Exchange Members (``EEMs'') that satisfy the 
requirements of Rule 600. Any market participant may choose to satisfy 
the additional requirements and obligations of being a Market Maker in 
order to qualify for the transaction fee waiver.
    The proposal to waive the transaction fees for Market Makers, and 
no other market participants, is equitable and not unfairly 
discriminatory because Market Markers on the Exchange have enhanced 
quoting obligations measured in both quantity (% time) and quality 
(minimum bid-ask differentials) that other market participants do not 
have.\9\ The proposal is reasonably designed to enhance the quality of 
quoting and volume transactions by limiting the proposal to those 
market participants that have these enhanced obligations to deliver 
quality markets. Waiving fees during this period should incent market 
participants and market makers on other exchanges to register as Market 
Makers on the Exchange, which will enhance the quality of quoting and 
increase the volume of contracts traded here. To the extent that this 
purpose is achieved, all the Exchange's market participants should 
benefit from the improved market liquidity. Enhanced market quality and 
increased transaction volume that results from the anticipated increase 
in Market Maker activity on the Exchange will benefit all market 
participants and improve competition on the Exchange.
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    \9\ See MIAX Rules 603, 604, 605.
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    The Exchange believes that an increase in the number of Market 
Makers, and an increase in the execution volume from Market Makers, 
will result in increased revenue from other fees and dues that may 
apply to Market Makers that may potentially offset a portion of the fee 
waiver.\10\ While the Exchange believes that an increase in the number 
of Market Makers, and an increase in the execution volume from Market 
Makers, may potentially result in increased trading activity of other 
market participants, the Exchange does not believe that the fee waiver 
will result in other market participants subsidizing the activity of 
Market Makers during the fee waiver period since the Exchange is not 
proposing any changes to increase the existing fees of other market 
participants in order to compensate for the temporary transaction fee 
waiver.
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    \10\ The Exchange notes that the proposal will have no effect on 
other fees and dues that may apply to Market Makers including 
marketing fees, Options Regulatory Fees, market data, and membership 
application fees.
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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 not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that 
proposed change would increase both intermarket and intramarket 
competition by incenting market participants and market makers on other 
exchanges to register as Market Makers on the Exchange, which will 
enhance the quality of quoting and increase the volume of contracts 
traded here. To the extent that there is addition [sic] competitive 
burden on non-Market Makers, the Exchange believes that this is 
appropriate because Market Markers registered on the Exchange have 
enhanced quoting obligations measured in both quantity (% time) and 
quality (minimum bid-ask differentials) that other market participants 
do not have. Waiving fees during this period should incent market 
participants and market makers on other exchanges to register as Market 
Makers on the Exchange, which will enhance the quality of quoting and 
increase the volume of contracts traded here. To the extent that this 
purpose is achieved, all the Exchange's market participants should 
benefit from the improved market liquidity. Enhanced market quality and 
increased transaction volume that results from the anticipated increase 
in Market Maker activity on the Exchange will benefit all market 
participants and improve competition on the Exchange. 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. In such an environment, the 
Exchange must continually adjust its fees to remain competitive with 
other exchanges and to attract order flow. The Exchange believes that 
the proposed rule change reflects this competitive environment because 
it reduces the Exchange's fees in a manner that encourages market 
participants to register as Market Makers, to provide liquidity, and to 
attract order flow to the Exchange. Given the robust competition for 
volume among options markets, many of which offer the same products, 
implementing a fee waiver program to attract Market Maker volume like 
the one being proposed in this filing is consistent with the above-
mentioned goals of the Act. This is especially true for the smaller 
options markets, such as MIAX, which is competing for volume with much 
larger exchanges that dominate the options trading industry. As a new 
exchange, MIAX has a nominal percentage of the average daily trading 
volume in options, so it is unlikely that the fee waiver could cause 
any competitive harm to the options market or to market participants. 
Rather, the fee waiver is a modest attempt by a small options market to 
attract order volume away from larger competitors by adopting an 
innovative pricing strategy. The Exchange notes that if the fee waiver 
resulted in a modest percentage increase in the average daily trading 
volume in options executing on MIAX, while such percentage would 
represent a large volume increase for MIAX, it would represent a 
minimal reduction in volume of its larger competitors in the industry. 
The Exchange believes that the proposal will help further competition, 
because market participants will have yet another additional option in 
determining where to execute orders and post liquidity if they factor 
the benefits of Market Maker transaction fees into the determination.

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

    Written comments were neither solicited nor 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.\11\ 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 should be approved or disapproved.
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    \11\ 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:

[[Page 35351]]

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File No. SR-MIAX-2013-26 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File No. SR-MIAX-2013-26. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://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 Web site 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 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-MIAX-2013-26 and should be 
submitted on or before July 3, 2013.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-13897 Filed 6-11-13; 8:45 am]
BILLING CODE 8011-01-P


