
[Federal Register Volume 78, Number 150 (Monday, August 5, 2013)]
[Notices]
[Pages 47457-47459]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18758]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70069; File No. SR-MIAX-2013-36]


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

July 30, 2013.
    Pursuant to the provisions of 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 22, 2013, Miami International Securities 
Exchange LLC (``MIAX'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``Commission'') a 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to extend its current waiver of all 
transaction fees in Section 1(a)(i) of the MIAX Options Fee Schedule 
(the ``fee waiver'') that apply to Market Makers \3\ registered on the 
Exchange until August 31, 2013.\4\ The fee waiver currently applies to 
the period beginning June 3, 2013 and ending July 31, 2013.\5\ 
Specifically, during this period, the Exchange will continue to 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.\6\
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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\ See Securities Exchange Act Release No. 69710 (June 6, 
2013), 78 FR 35349 (June 12, 2013) (SR-MIAX-2013-26). The fee waiver 
only applies 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 fee waiver has 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 Securities Exchange Act Release No. 69710 (June 6, 
2013), 78 FR 35349 (June 12, 2013) (SR-MIAX-2013-26).
    \6\ See MIAX Options Fee Schedule, Section 1(a)(i)--Market Maker 
Transaction Fees.
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    The fee waiver is designed both to enhance the Exchange's 
competitiveness with other option exchanges and to strengthen its 
market quality. The Exchange believes that the fee waiver increases 
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 promotes 
tighter bid-ask spreads by Market Makers, and increases 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 the Exchange's daily percentage of the total market volume in MIAX 
listed options has increased since the beginning of the fee waiver--
indicating that the fee waiver has enabled 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.\7\
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    \7\ 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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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 fees and other charges 
among Exchange members.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the fee waiver is fair, equitable and 
not unreasonably discriminatory. The 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 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 fee waiver 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.\10\ 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

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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 in options listed on MIAX. 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 increase in Market 
Maker activity on the Exchange will benefit all market participants and 
improve competition on the Exchange.
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    \10\ 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.\11\ 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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    \11\ The Exchange notes that the fee waiver has 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

    MIAX 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 the fee waiver 
increases 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 on MIAX. To the 
extent that there is an additional 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 fee 
waiver 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 
extended 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 extension of the fee waiver results 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 alternative 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.\12\ 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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    \12\ 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include SR-
MIAX-2013-36 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 Number SR-MIAX-2013-36. 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 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

[[Page 47459]]

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 
the 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 Number SR-MIAX-2013-36 and should be submitted on or before August 
26, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18758 Filed 8-2-13; 8:45 am]
BILLING CODE 8011-01-P


