
[Federal Register Volume 79, Number 175 (Wednesday, September 10, 2014)]
[Notices]
[Pages 53808-53811]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21521]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72988; File No. SR-MIAX-2014-46]


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

September 4, 2014.
    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 25, 2014, 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/
rulefiling, 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

[[Page 53809]]

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 amend its Fee Schedule to: (i) Amend the 
MIAX Market Maker sliding scale to change the volume threshold 
calculations from aggregate numbers to percentages of total national 
Market Maker volume; (ii) increase the transaction fees for MIAX Market 
Makers, Public Customers that are not a Priority Customer, Non-MIAX 
Market Makers, Non-Member Broker-Dealers, and Firms by $0.02 per 
contract; and (iii) provide for additional incentives for achieving 
certain Priority Customer Rebate Program volume tiers. The proposed 
changes are based on the similar fees of another competing options 
exchange.\3\
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    \3\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II. See 
also Securities Exchange Act Release Nos. 71716 (March 13, 2014), 79 
FR 71716 (March 19, 2014) (SR-PHLX-2014-14); 72395 (June 16, 2014), 
79 FR 35391 (SR-PHLX-2014-38).
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Volume Tiers
    The Exchange proposes to amend the MIAX Market Maker sliding scale 
to change the volume threshold calculations from aggregate numbers to 
percentages of total national Market Maker volume of any options 
classes with traded volume on MIAX during the calendar month. The 
Exchange notes that the sliding fee scale for MIAX Market Makers 
structured on contract volume thresholds is based on the substantially 
similar fees of the CBOE.\4\ By amending the volume tier calculations, 
the sliding scale will more closely align with that of CBOE, which also 
currently uses a substantially similar volume threshold calculation 
based on percentages of total national Market Maker volume of any 
options classes that trade on the exchange during the calendar month. 
The Market Maker sliding scale will continue to apply to MIAX Market 
Maker (RMM, LMM, DLMM, PLMM, DPLMM) transaction fees in all products 
except mini-options. MIAX Market Makers will continue to be assessed a 
$0.02 per executed contract fee for transactions in mini-options.
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    \4\ See Securities Exchange Act Release Nos. 55193 (January 30, 
2007), 72 FR 5476 (February 6, 2007) (SR-CBOE-2006-111); 58321 
(August 6, 2008), 73 FR 46955 (SR-CBOE-2008-78); 71295 (January 14, 
2014), 79 FR 3443 (January 21, 2014) (SR-CBOE-2013-129).
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    The Exchange believes the proposed sliding scale is objective in 
that the fee reductions are based solely on reaching stated volume 
thresholds. The specific volume thresholds of the tiers were set based 
upon business determinations and an analysis of current volume levels. 
The specific volume thresholds and rates were set in order to encourage 
MIAX Market Makers to reach for higher tiers. The Exchange believes 
that the proposed changes to the tiered fee schedule may incent firms 
to display their orders on the Exchange and increase the volume of 
contracts traded here.
Options Transaction Fees
    The Exchange proposes to increase the transaction fees for MIAX 
Market Makers, Public Customers that are not a Priority Customer, Non-
MIAX Market Makers, Non-Member Broker-Dealers, and Firms by $0.02 per 
contract. Specifically, the Exchange proposes to increase transaction 
fees for each of the volume tiers for MIAX Market Makers by $0.02. The 
Exchange will also increase the transaction fees for Public Customers 
that are not a Priority Customer and Firms from $0.25 to $0.27 per 
contract. Further, the Exchange will increase the transaction fees for 
Non-MIAX Market Makers and Non-Member Broker-Dealers from $0.45 to 
$0.47. The Exchange believes that these fee increases will permit the 
Exchange to incentivize market participants by offering other 
incentives to lower prices as described herein.
Priority Customer Rebate Incentives
    The Exchange proposes to offer MIAX Market Makers, Public Customers 
that are not a Priority Customer, Non-MIAX Market Makers, Non-Member 
Broker-Dealers, and Firms the opportunity to reduce transaction fees by 
$0.02 per contract in standard options if the Member or its affiliates 
of at least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A, qualifies in a given month for Priority 
Customer Rebate Program volume tiers 3, 4, or 5 in the Fee Schedule.\5\ 
Specifically, any Member or its affiliates of at least 75% common 
ownership between the firms as reflected on each firm's Form BD, 
Schedule A, that qualifies for Priority Customer Rebate Program volume 
tiers 3, 4, or 5 and is a MIAX Market Maker will be assessed $0.15 per 
contract for tier 1, $0.10 per contract for tier 2, $0.05 per contract 
for tier 3, and $0.03 per contract for tier 4 for transactions in 
standard options in lieu of the applicable transaction fees in the 
Market Maker sliding scale. In addition, any Member or its affiliates 
of at least 75% common ownership between the firms as reflected on each 
firm's Form BD, Schedule A, that qualifies for Priority Customer Rebate 
Program volume tiers 3, 4, or 5 and is a Public Customers that are not 
a Priority Customer or Firm will be assessed $0.25 per contract for 
standard options. Further, any Member or its affiliates of at least 75% 
common ownership between the firms as reflected on each firm's Form BD, 
Schedule A, that qualifies for Priority Customer Rebate Program volume 
tiers 3, 4, or 5 and is a Non-MIAX Market Makers or Non-Member Broker-
Dealers will be assessed $0.45 per contract for standard options.
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    \5\ See MIAX Options Fee Schedule, Section 1)a)iii).
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    The Exchange believes that these incentives will encourage MIAX 
Market Makers, Public Customers that are not a Priority Customer, Non-
MIAX Market Makers, Non-Member Broker-Dealers, and Firms to transact a 
greater number of orders on the Exchange.
    The Exchange proposes to implement the new transaction fees 
beginning September 1, 2014.
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 proposed changes to the volume calculations for the sliding 
scale are reasonable, equitable, and not unfairly discriminatory. The 
proposed volume discount fee structure is not discriminatory in that 
all MIAX Market Makers are eligible to submit (or not submit) 
liquidity, and may do so at their discretion in the daily volumes they 
choose during the course of the billing period. All similarly situated 
MIAX Market Makers are subject to the same fee structure, and access to 
the Exchange is offered on terms that are not unfairly discriminatory. 
Volume based discounts have been widely adopted by options and equities 
markets, and are equitable because they are open to all MIAX Market 
Makers on an equal basis and provide discounts that are reasonably 
related to the value of an exchange's market quality associated with 
higher volumes. The

[[Page 53810]]

proposed fee levels and volume thresholds are reasonably designed to be 
comparable to those of other options exchanges employing similar fee 
programs, and also to attract additional liquidity and order flow to 
the Exchange.
    The Exchange's proposal to increase the transaction fees for MIAX 
Market Makers, Public Customers that are not a Priority Customer, Non-
MIAX Market Makers, Non-Member Broker-Dealers, and Firms is reasonable 
because the Exchange's fees will remain competitive with fees at other 
options exchanges.\8\ The Exchange's proposal to increase the 
transaction fees for MIAX Market Makers, Public Customers that are not 
a Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers, 
and Firms is equitable and not unfairly discriminatory because the 
increase applies equally to all such market participants. The Exchange 
does not assess Priority Customers transactions fees because Priority 
Customer order flow enhances liquidity on the Exchange for the benefit 
of all market participants. Priority Customer liquidity benefits all 
market participants by providing more trading opportunities, which 
attracts Market Makers and other market participants. An increase in 
the activity of these market participants in turn facilitates tighter 
spreads, which may cause an additional corresponding increase in order 
flow from other market participants. Market Makers are assessed lower 
transaction fees as compared to Public Customers that are not a 
Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers, 
and Firms because they have obligations to the market and regulatory 
requirements, which normally do not apply to other market 
participants.\9\ They have obligations to make continuous markets, 
engage in a course of dealings reasonably calculated to contribute to 
the maintenance of a fair and orderly market, and not make bids or 
offers or enter into transactions that are inconsistent with a course 
of dealings. In addition, charging non-members higher transaction fees 
is a common practice amongst exchanges because Members are subject to 
other fees and dues associated with their membership to the Exchange 
that do not apply to non-members. The proposed differentiation as 
between Priority Customers, Market Makers, and other market 
participants recognizes the differing contributions made to the 
liquidity and trading environment on the Exchange by these market 
participants.
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    \8\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section II; NASDAQ 
Options Market LLC's Pricing Schedule, Chapter XV.
    \9\ See Exchange Rules 603 and 604.
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    The Exchange's proposal to offer MIAX Market Makers, Public 
Customers that are not a Priority Customer, Non-MIAX Market Makers, 
Non-Member Broker-Dealers, and Firms the opportunity to reduce 
transaction fees by $0.02 per contract in standard options, provided 
certain criteria are met, is reasonable because the Exchange desires to 
offer all such market participants an opportunity to lower their 
transaction fees. The Exchange's proposal to offer MIAX Market Makers, 
Public Customers that are not a Priority Customer, Non-MIAX Market 
Makers, Non-Member Broker-Dealers, and Firms the opportunity to reduce 
transaction fees by $0.02 per contract in standard options, provided 
certain criteria are met, is equitable and not unfairly discriminatory 
because the Exchange will offer all market participants, excluding 
Priority Customers, a means to reduce transaction fees by qualifying 
for volume tiers in the Priority Customer Rebate Program. The Exchange 
believes that offering all such market participants the opportunity to 
lower transaction fees by incentivizing them to transact Priority 
Customer order flow in turn benefits all market participants.
    The Exchange believes that the proposal to allow the aggregation of 
trading activity of separate Members or its affiliates for purposes of 
the fee reduction is fair, equitable and not unreasonably 
discriminatory. The Exchange believes the proposed rule change is 
reasonable because it would allow aggregation of the trading activity 
of separate Members or its affiliates for purposes of the fee reduction 
only in very narrow circumstances, namely, where the firm is an 
affiliate, as defined herein. Furthermore, other exchanges, as well as 
MIAX, have rules that permit the aggregation of the trading activity of 
affiliated entities for the purposes of calculating and assessing 
certain fees. The Exchange believes that offering all such market 
participants the opportunity to lower transaction fees by incentivizing 
them to transact Priority Customer order flow in turn benefits 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. The proposal is similar to the 
transaction fees found on other options exchanges; therefore, the 
Exchange believes the proposal is consistent with robust competition by 
increasing the intermarket competition for order flow from market 
participants. To the extent that there is additional competitive burden 
on market participants without Priority Customer order flow, the 
Exchange believes that this is appropriate because the proposal should 
incent Members to direct additional order flow to the Exchange and thus 
provide additional liquidity that enhances the quality of its markets 
and increases 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 order flow directed to 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.

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

[[Page 53811]]

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-2014-46 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-MIAX-2014-46. 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-2014-46 and should be 
submitted on or before October 1, 2014.

    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. 2014-21521 Filed 9-9-14; 8:45 am]
BILLING CODE 8011-01-P


