
[Federal Register Volume 80, Number 88 (Thursday, May 7, 2015)]
[Notices]
[Pages 26304-26306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10952]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74856; File No. SR-MIAX-2015-31]


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

May 1, 2015.
    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 April 29, 2015, 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 modify the Market Maker 
Trading Permit Fee.
    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 modify the monthly Trading Permit fees 
that apply to Market Makers (``MMs''). Specifically, the Exchange 
proposes to adopt the following fees: (i) $7,000 for MM Assignments in 
up to 10 option classes or up to 20% of option classes by volume; (ii) 
$12,000 for MM Assignments in up to 40 option classes or up to 35% of 
option classes by volume; (iii) $17,000 for MM Assignments in up to 100 
option classes or up to 50% of option classes by volume; and (iv) 
$22,000.00 for MM Assignments in over 100 option classes or over 50% of 
option classes up to all option classes listed on MIAX.
    The Exchange issues Trading Permits that confer the ability to 
transact on the Exchange.\3\ Currently, all MMs, whether they are a 
RMM, LMM or PLMM, are assessed $15,000 per month for a Trading Permit 
for an assignment in up to 250 option classes, or $22,000 per month for 
a Trading Permit for an assignment in over 250 option classes up to all 
option classes listed on the Exchange.\4\ The Exchange notes that the

[[Page 26305]]

current monthly Trading Permit fees are within the range of competing 
options exchanges.\5\ The MM permit fee for up to 250 classes is higher 
than that of NYSE Arca Options.\6\ The MM permit fee for all options 
classes on the exchange is lower than NYSE Amex Options, however it is 
higher than the fee charged by NYSE Arca Options. The Exchange 
established the current rates to more closely align with the rates 
charged by competing options exchanges. Now, the Exchange proposes to 
modify its Trading Permit fee for MMs to establish the ability for MMs 
to qualify for lower rates in order to encourage additional market 
participants to become Members of the Exchange and register as MIAX 
Market Makers.
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    \3\ There is no limit on the number of Trading Permits that may 
be issued by the Exchange; however the Exchange has the authority to 
limit or decrease the number of Trading Permits it has determined to 
issue provided it complies with the provisions set forth in Rule 
200(a) and section 6(c)(4) of the Exchange Act. See 15 U.S.C. 
78(f)(c)(4). For a complete description of MIAX Trading Permits, see 
MIAX Rule 200.
    \4\ The monthly Trading Permit Fee is in addition to the one-
time application fee for MIAX Membership. The Exchange charges a 
one-time application fee based upon the applicant's status as either 
an Electronic Exchange Member (``EEM'') or as a Market Maker. 
Applicants for MIAX Membership as an EEM are assessed a one-time 
Application Fee of $2,500.00. Applicants for MIAX Membership as a 
Market Maker are assessed a one-time Application Fee of $3,000.00. 
The difference in the fee charged to EEMs and Market Makers reflects 
the additional review and processing effort needed for Market Maker 
applications.
    \5\ See e.g., NYSE Arca Options Fees and Charges, p.1 (assessing 
market makers $6,000 for up to 100 option issues, an additional 
$5,000 for up to 250 option issues, an additional $4,000 for up to 
750 option issues, and an additional $3,000 for all option issues on 
the exchange); NYSE Amex Options Fee Schedule, p. 19 (assessing 
market makers $8,000 for up to 60 plus the bottom 45%, an additional 
$6,000 for up to 150 plus the bottom 45%, an additional $5,000 for 
up to 500 plus the bottom 45%, and additional $4,000 for up to 1,100 
plus the bottom 45%, and an additional $3,000 for all issues traded 
on the exchange; plus an addition fee for premium products).
    \6\ See supra note 5.
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    The Exchange proposes to modify its Trading Permit fees that apply 
to MMs. Specifically, the Exchange proposes to adopt the following 
fees: (i) $7,000 for MM Assignments in up to 10 option classes or up to 
20% of option classes by volume; (ii) $12,000 for MM Assignments in up 
to 40 option classes or up to 35% of option classes by volume; (iii) 
$17,000 for MM Assignments in up to 100 option classes or up to 50% of 
option classes by volume; and (iv) $22,000.00 for MM Assignments in 
over 100 option classes or over 50% of option classes by volume up to 
all option classes listed on MIAX. For the calculation of the monthly 
Trading Permit Fees that apply to MMs, the number of classes is defined 
as the greatest number of classes the MM was assigned to quote in on 
any given day within the calendar month and the class volume percentage 
is based on the total national average daily volume in classes listed 
on MIAX in the prior calendar quarter.\7\ Newly listed option classes 
are excluded from the calculation of the monthly MM Trading Permit Fee 
until the calendar quarter following their listing, at which time the 
newly listed option classes will be included in both the per class 
count and the percentage of total national average daily volume. The 
Exchange will assess MMs the monthly Trading Permit Fee based on the 
greatest number of classes listed on MIAX that the MM was assigned to 
quote in on any given day within a calendar month and the applicable 
fee rate that is the lesser of either the per class basis or percentage 
of total national average daily volume measurement. For example, if MM1 
elects to quote the top 40 option classes which consist of 58% of the 
total national average daily volume in the prior quarter, the Exchange 
would assess $12,000 to MM1 for the month which is the lesser of `up to 
40 classes' and `above 50% of classes by volume up to all classes 
listed on MIAX'. If MM2 elects to quote the bottom 1000 option classes 
which consist of 10% of the total national average daily volume in the 
prior quarter, the Exchange would assess $7,000 to MM2 for the month 
which is the lesser of `above 100 classes' and `up to 20% of classes by 
volume'.
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    \7\ The Exchange will use the following formula to calculate the 
percentage of total national average daily volume that the MM 
assignment is for purposes of the MM trading permit fee for a given 
month.
    MM assignment percentage of national average daily volume = 
[total volume during the prior calendar quarter in a class in which 
the MM was assigned]/[total national volume in classes listed on 
MIAX in the prior calendar quarter]
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    Members receiving Trading Permits during the month will be assessed 
Trading Permit Fees according to the above schedule, except that the 
calculation of the Trading Permit fee for the first month in which the 
Trading Permit is issued will be pro-rated based on the number of 
trading days occurring after the date on which the Trading Permit was 
in effect during that first month divided by the total number of 
trading days in such month multiplied by the monthly rate.
    The purpose of the proposed fees is to incentivize market 
participants to register as Market Makers on the Exchange, to provide 
liquidity, and to attract order flow. To the extent that this purpose 
is achieved, all the Exchange's market participants should benefit from 
the improved market liquidity. The proposed fee levels and criteria are 
based upon a business determination of current MM assignments and 
trading volume. The Exchange believes that the proposed fee rates and 
criteria provide an objective and flexible framework that will 
encourage MMs to be assigned and quote in option classes with lower 
total national average daily volume while also equitably allocating the 
fees in a reasonable manner amongst MM assignments to account for 
quoting and trading activity.
    The Exchange proposes to implement the Trading Permit fees 
beginning May 1, 2015.
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 proposed Trading Permit fees are 
reasonable, equitable and not unfairly discriminatory. The proposed 
Trading Permit fees are reasonable in that they are within the range of 
comparable fees at other competing options exchanges.\10\ As such, the 
proposal is reasonably designed to continue to compete with other 
options exchange by incentivizing market participants to register as 
Market Makers on the Exchange in a manner that enables 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 apply equally to all 
Market Makers regardless of type and access to the Exchange is offered 
on terms that are not unfairly discriminatory. The Exchange designed 
the fee rates in order to provide objective criteria for MMs of 
different sizes and business models to be assessed a Trading Permit Fee 
that best matches their quoting activity on the Exchange. The Exchange 
notes that trading volume and quoting activity in the options market 
tends to be concentrated in the top ranked options classes; with the 
vast majority of options classes being thinly quoted and traded. The 
Exchange believes that the proposed fee rates and criteria provide an 
objective and flexible framework that will encourage MMs to be assigned 
and quote in option classes with lower total national average daily 
volume while also equitably allocating the fees in a reasonable manner 
amongst MM assignments to account for quoting and trading activity.
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    \10\ See supra note 5.
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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 
enabling MMs to qualify for lower Trading Permit fees rates on the 
Exchange in a manner

[[Page 26306]]

that is designed to provide objective criteria for MMs of different 
sizes and business models to be assessed a Trading Permit Fee that best 
matches their quoting activity on the Exchange yet still be in the 
range of comparable fees on other exchanges. The Exchange believes that 
the proposal will increase competition amongst MMs of different sizes 
and business models by encouraging MMs to be assigned and quote in 
option classes with lower total national average daily volume. 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 to the Exchange. The 
Exchange believes that the proposal reflects this competitive 
environment because it modify the Exchange's fees in a manner that 
continues to encourage market participants to register as Market Makers 
on the Exchange, to provide liquidity, and to attract order flow. To 
the extent that this purpose is achieved, all the Exchange's market 
participants should benefit from the improved market liquidity.

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:

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-2015-31 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-MIAX-2015-31. 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 will also 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-2015-31 and should be 
submitted on or before May 28, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-10952 Filed 5-6-15; 8:45 am]
 BILLING CODE 8011-01-P


