
[Federal Register Volume 80, Number 58 (Thursday, March 26, 2015)]
[Notices]
[Pages 16048-16049]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-06888]



[[Page 16048]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74554; File No. SR-MIAX-2015-21]


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

March 20, 2015.
    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 March 11, 2015, Miami International Securities Exchange, LLC 
(``MIAX'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``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 the MIAX Options 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 amend its Fee Schedule to provide for 
additional incentives for achieving certain Priority Customer Rebate 
Program volume tiers and sending additional Priority Customer Orders 
into PRIME.
    The Exchange proposes to offer Members the opportunity to qualify 
for a $0.02 per contract rebate 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.\3\ 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 will be credited an additional $0.02 
per contract for each Priority Customer order executed in the PRIME 
Auction as a PRIME Agency Order over a threshold of 1,500,000 contracts 
in a month. Volume will be recorded for and credits will be delivered 
to the Member Firm that submits the order to MIAX. The $0.02 per 
contract credit would be in addition to the $0.10 per contract credit 
that currently applies to the PRIME Agency Order transactions that are 
Priority Customers. The Exchange proposes to exclude from this 
additional rebate and its volume threshold calculation orders executed 
as mini-options, Priority Customer-to-Priority Customer Orders, PRIME 
AOC Responses, PRIME Contra-side Orders, PRIME Orders for which both 
the Agency and Contra-side Order are Priority Customers, and executions 
related to contracts that are routed to one or more exchanges in 
connection with the Options Order Protection and Locked/Crossed Market 
Plan referenced in MIAX Rule 1400. The Exchange notes that these 
exclusions are identical to the exclusions that are currently found in 
the Priority Customer Rebate Program and that also apply to the per 
contract credit for PRIME Agency Orders.\4\
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    \3\ See MIAX Options Fee Schedule, Section 1)a)iii).
    \4\ See id.
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    The Exchange believes that these incentives will encourage Members 
to transact a greater number of orders on the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal to amend its fee schedule 
is consistent with Section 6(b) of the Act \5\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \6\ in particular, in that 
it is an equitable allocation of reasonable fees and other charges 
among Exchange members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed Priority Customer Rebate 
Program rebates for Priority Customer orders submitted into PRIME are 
fair, equitable and not unreasonably discriminatory. The rebate program 
is reasonably designed because it will incent providers of Priority 
Customer order flow to send that Priority Customer order flow to the 
Exchange in order to receive a credit in a manner that enables the 
Exchange to improve its overall competitiveness and strengthen its 
market quality for all market participants. The proposed rebate program 
is fair, equitable, and not unreasonably discriminatory because it will 
apply equally to all Priority Customer orders submitted as a PRIME 
Agency Order. All similarly situated Priority Customer orders are 
subject to the same rebate schedule, and access to the Exchange is 
offered on terms that are not unfairly discriminatory. In addition, the 
proposed rebate program is equitable and not unfairly discriminatory 
because, while only Priority Customer order flow qualifies for the 
rebate program, an increase in Priority Customer order flow will bring 
greater volume and liquidity, which benefit all market participants by 
providing more trading opportunities and tighter spreads. Market 
participants want to trade with Priority Customer order flow. To the 
extent Priority Customer order flow is increased by the proposal, 
market participants will increasingly compete for the opportunity to 
trade on the Exchange including sending more orders and providing 
narrower and larger sized quotations in the effort to trade with such 
Priority Customer order flow. The resulting increased volume and 
liquidity will benefit those Members who receive the lower tier levels, 
or do not qualify for the rebate program at all, by providing more 
trading opportunities and tighter spreads.
    The Exchange believes excluding Priority Customer-to-Priority 
Customer Orders, Priority Customer responses, contra-side orders, and 
Priority Customer-to-Priority Customer PRIME transactions from the 
number of options contracts executed on the Exchange by any Member for 
purposes of the volume threshold and the rebate program is reasonable, 
equitable, and not unfairly discriminatory because participating 
Members could otherwise game the rebate program and volume thresholds 
by executing excess volumes in these types of transactions in which no 
transaction fees are charged on the Exchange. Further, the Exchange

[[Page 16049]]

believes that excluding these PRIME transactions from the volume 
calculation is reasonable, equitable, and not unfairly discriminatory 
because the rebate program was established prior to the introduction of 
the PRIME Auction based on non-auction transaction fee and volume 
calculations. In contrast, the Exchange proposes to target new volume 
to the Exchange to compete with electronic price improvement mechanisms 
on other exchanges. The Exchange believes that the new rebate for 
Priority Customer agency orders in the PRIME Auction is reasonably 
designed to incentivize additional retail customer order flow to the 
PRIME Auction.
    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.\7\ 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.
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    \7\ See e.g., Chicago Board Options Exchange, Incorporated, Fee 
Schedule, p. 13; NYSE Amex Options Fee Schedule, p. 12.
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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 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 and those market 
participants that are not able to aggregate order flow with affiliates, 
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.\8\ 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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    \8\ 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-2015-21 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-2015-21. 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 offices 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-2015-21, 
and should be submitted on or before April 16, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06888 Filed 3-25-15; 8:45 am]
 BILLING CODE 8011-01-P


