
[Federal Register Volume 78, Number 178 (Friday, September 13, 2013)]
[Notices]
[Pages 56762-56764]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-22305]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70346; File No. SR-MIAX-2013-41]


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

September 9, 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 August 28, 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to establish a $0.05 transaction fee for 
executions in standard option contracts and $0.005 transaction fee for 
Mini Option contracts for Market Makers \3\ registered on the Exchange.
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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 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.
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    The transaction fees for Market Makers are: (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.\4\ These transaction fees are 
currently subject to a fee waiver until August 31, 2013.\5\
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    \4\ See MIAX Options Fee Schedule, Section 1(a)(i)--Market Maker 
Transaction Fees.
    \5\ See Securities Exchange Act Release Nos. 70069 (July 30, 
2013), 78 FR 47457 (August 5, 2013) (SR-MIAX-2013-36); 69710 (June 
6, 2013), 78 FR 35349 (June 12, 2013) (SR-MIAX-2013-26).
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    The Exchange proposes to implement the new transaction fees 
beginning September 3, 2013, after the current fee waiver expires. The 
proposed transaction fees are designed both to enhance the Exchange's 
competitiveness with other option exchanges and to strengthen its 
market quality. The Exchange believes that the new fees will 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 the 
reduced transaction fees for Market Makers registered on the Exchange 
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.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \6\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \7\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposal is fair, equitable and not 
unreasonably discriminatory. The proposal is reasonable because it 
results in a decrease in Market Maker transactions fees for all Market 
Makers on the Exchange in order to enable the Exchange to improve its 
overall competitiveness and strengthen its market quality for all 
market participants. The proposed fees are fair and equitable and not 
unreasonably discriminatory because they will apply equally to all 
Market Makers regardless of type. All Market Makers will be subject to 
the same transaction fee, 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.
    The decrease in 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.\8\ 
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. Decreasing transaction fees 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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    \8\ 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 
lower transaction

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fees.\9\ 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 proposed 
fee will result in other market participants subsidizing the activity 
of Market Makers since the Exchange is not proposing any changes to 
increase the existing fees of other market participants in order to 
compensate for the proposed fee.
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    \9\ The Exchange notes that the proposal 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

    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 the 
proposal 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. 
Decreasing transaction fees 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 
proposal 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, proposals to 
implement lower transaction fees to attract Market Maker volume like 
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 lowering transaction fees could cause any competitive 
harm to the options market or to market participants. Rather, the 
proposal 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 proposal 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.\10\ 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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    \10\ 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 
File Number SR-MIAX-2013-41 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-2013-41. 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 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-2013-41, and should be 
submitted on or before October 4, 2013.


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22305 Filed 9-12-13; 8:45 am]
BILLING CODE 8011-01-P


