
[Federal Register Volume 84, Number 33 (Tuesday, February 19, 2019)]
[Notices]
[Pages 4864-4868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02606]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85109; File No. SR-MRX-2019-01]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Amend the 
Exchange's Provisions for Excluding a Day From Its Volume Calculations 
for Purposes of Determining Pricing Tiers

February 12, 2019.
    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 January 31, 2019, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's provisions for 
excluding a day from its volume calculations for purposes of 
determining pricing tiers.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqmrx.cchwallstreet.com/, at the principal office 
of the Exchange, 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 purpose of the proposed rule change is to amend the Exchange's 
provisions for excluding a day from its volume calculations for 
purposes of determining pricing tiers. The Exchange is standardizing 
its practice for removing a day from volume calculations in its Pricing 
Schedule with its affiliated options market, Nasdaq PHLX LLC 
(``Phlx'').\3\ Each change is discussed below.
---------------------------------------------------------------------------

    \3\ See Phlx Pricing Schedule, Options 7, Section 1(b). The 
Exchange's other affiliated options markets, Nasdaq ISE, Nasdaq 
GEMX, Nasdaq BX, and The Nasdaq Options Market will also file 
similar rule change proposals to conform to Phlx's rule.
---------------------------------------------------------------------------

Background
    To avoid penalizing members when aberrant low volume days result 
from systems or other issues at the Exchange, or where the Exchange 
closes early for holiday observance, the Exchange currently has 
language in its Pricing Schedule allowing it to exclude certain days 
from its average daily volume (``ADV'') calculations. Currently, 
language in the Exchange's Pricing Schedule provides that, for purposes 
of determining ADV for certain incentive programs,\4\ any day that the 
market is not open for the entire trading day or the Exchange instructs 
members in writing to route their orders to other markets may be 
excluded from such calculation; provided that the Exchange will only 
remove the day for members that would have a lower ADV with the day 
included. The proviso language (hereinafter, the ``better of rule'') 
ensures that members would only have the day removed when doing so is 
beneficial for the member. As such, the Exchange only applies the 
better of rule to ADV calculations, and not for other volume-based 
pricing where members would not benefit from having the day excluded 
(e.g., straight volume accumulations).
---------------------------------------------------------------------------

    \4\ The current language in the Pricing Schedule applies to the 
calculations of Total Affiliated and/or Appointed Member ADV used to 
determine tiered maker/taker fees for members. See Options 7, 
Section 3, Table 3 (Qualifying Tier Thresholds).
---------------------------------------------------------------------------

Proposal
    In Options 7, Section 1, the Exchange proposes to adopt subsection 
(a) with the title ``Removal of Days for Purposes of Pricing Tiers,'' 
and renumber the existing first paragraph (related to fee disputes) as 
subsection (b). The Exchange also proposes to adopt new language in 
subsection (a) that is substantially similar to language currently in 
place on Phlx.\5\ Specifically, as proposed:
---------------------------------------------------------------------------

    \5\ See note 3 above.
---------------------------------------------------------------------------

    (1)(A) Any day that the Exchange announces in advance that it will 
not be open for trading will be excluded from the options tier 
calculations set forth in its Pricing Schedule; and (B) any day with a 
scheduled early market close (``Scheduled Early Close'') may be 
excluded from the options tier calculations only pursuant to paragraph 
(3) below.
    (2) The Exchange may exclude the following days (``Unanticipated 
Events'') from the options tier calculations only pursuant to paragraph 
(3) below, specifically any day that: (A) The market is not open for 
the entire trading day, (B) the Exchange instructs members in writing 
to route their orders to other markets, (C) the Exchange is 
inaccessible to members during the 30-minute period before the opening 
of trade due to an Exchange system disruption, or (D) the Exchange's 
system experiences a disruption that lasts for more than 60 minutes 
during regular trading hours.
    (3) If a day is to be excluded as a result of paragraph (1)(B) or 
(2) above, the Exchange will exclude the day from

[[Page 4865]]

any member's monthly options tier calculations as follows:
    (A) The Exchange may exclude from the ADV calculation any Scheduled 
Early Close or Unanticipated Event; and
    (B) the Exchange may exclude from any other applicable options tier 
calculation provided for in its Pricing Schedule (together with (3)(A), 
``Tier Calculations'') any Scheduled Early Close or Unanticipated 
Event.

provided, in each case, that the Exchange will only remove the day for 
members that would have a lower Tier Calculation with the day included.
    The proposed language: (i) Applies the rule for excluding days to 
all volume based calculations rather than specified incentive 
programs,\6\ (ii) expands upon the existing scenarios where the 
Exchange may remove a day to adopt two additional situations related to 
Exchange systems disruptions, (iii) categorizes the potential excluded 
days into days that are known in advance (i.e., days in proposed 
paragraph (1), including Scheduled Early Closes) and days that are not 
(i.e., Unanticipated Events in proposed paragraph (2)), (iv) clarifies 
how the potential excluded days proposed above would be removed from 
the ADV and other applicable volume based tier calculations in the 
Pricing Schedule, and (v) generally adds more detail to clarify the 
application of the better of rule. As it relates to Unanticipated 
Events, the Exchange will inform all members if any such day will be 
excluded from its Tier Calculations through a system status message 
disseminated to all members. The Exchange notes that it is not 
proposing to amend the thresholds a member must achieve to become 
eligible for, or the dollar amount associated with, the tiered rebates 
or fees.
---------------------------------------------------------------------------

    \6\ See note 4 above. Since the proposed language will now apply 
to all current and future programs administered by the Exchange that 
are based on ADV and other applicable volume calculations, the 
current rule in Options 7, Section 3 will be replaced by the 
proposed language in Section 1(a) with the modifications described 
above, including language providing that the rule will apply to all 
Tier Calculations in its Pricing Schedule.
---------------------------------------------------------------------------

Rule Application
    Currently, the Exchange's rule for removing a day from its ADV 
calculations applies to specific ADV calculations of Total Affiliated 
\7\ and/or Appointed Member \8\ ADV \9\ and Total Affiliated and/or 
Appointed Priority Customer ADV.\10\ As applied, the Exchange can 
remove a day from tier calculations for the maker fees \11\ and taker 
fees \12\ assessed to members.\13\ The Exchange now believes it is 
appropriate to expand this provision to cover all volume based 
calculations including ADV rather than limit it to specific enumerated 
programs. Applying this rule to all volume based calculations will 
benefit members by permitting the Exchange to exclude atypical low 
volume days from its volume calculations regardless of the specific 
pricing program impacted. As is the case today, the Exchange would only 
remove the day for members that would have a lower volume calculation 
with the day included. This change will standardize the Exchange's 
practice with Phlx, which currently applies its rule to cover all ADV 
and other volume calculations set forth in its pricing schedule rather 
than specified programs.\14\
---------------------------------------------------------------------------

    \7\ An ``Affiliated Member'' is a Member that shares at least 
75% common ownership with a particular Member as reflected on the 
Member's Form BD, Schedule A.
    \8\ An ``Appointed Member'' is either an Appointed Market Maker 
or Appointed Order Flow Provider. An ``Appointed Market Maker'' is a 
Market Maker who has been appointed by an Electronic Access Member 
pursuant to Section 3, Table 3. An ``Appointed Order Flow Provider'' 
is an Electronic Access Member who has been appointed by a Market 
Maker pursuant to Section 3, Table 3.
    \9\ Total Affiliated and/or Appointed Member ADV means all ADV 
executed on the Exchange in all symbols and order types, including 
volume executed by Affiliated Members and/or Appointed Members. All 
eligible volume from Affiliated Members will be aggregated in 
determining applicable tiers. All eligible volume from an Appointed 
Order Flow Provider will be aggregated with its designated Appointed 
Market Maker's eligible volume in determining the Appointed Market 
Maker's applicable tiers, provided the Appointed Market Maker is 
designated by the Appointed Order Flow Provider in accordance with 
Section 3, Table 3. An Appointed Market Maker is eligible to receive 
and aggregate volume credit from both their Affiliated Members and 
their Appointed Order Flow Provider. An Appointed Order Flow 
Provider will not receive volume credit from its Appointed Market 
Maker or the Appointed Market Maker's Affiliated Members in 
determining its applicable tiers.
    \10\ Total Affiliated and/or Appointed Priority Customer ADV 
means all Priority Customer ADV executed on the Exchange in all 
symbols and order types, including volume executed by Affiliated 
Members and/or Appointed Members. The Exchange aggregates volume 
executed by Affiliated Members and Appointed Members in the same 
manner as it aggregates volume for purposes of Total Affiliated and/
or Appointed Member ADV. See note 9 above.
    \11\ Members are charged tiered maker fees in Penny Symbols and 
Non-Penny Symbols, all of which are based on Total Affiliated and/or 
Appointed Member ADV. See Options 7, Section 3, Table 1.
    \12\ Members are charged tiered taker fees in Penny Symbols and 
Non-Penny Symbols, all of which are based on Total Affiliated and/or 
Appointed Member ADV. See Options 7, Section 3, Table 1. A reduced 
Market Maker taker fee in Penny and Non-Penny Symbols of $0.05 per 
contract applies instead of the applicable Market Maker taker fee 
when trading with Priority Customer orders entered by an Affiliated 
Member or Appointed Member if the Member has a Total Affiliated and/
or Appointed Priority Customer ADV of 5,000 contracts or more. This 
Market Maker taker fee is further reduced to $0.00 per contract when 
trading with Priority Customer orders entered by an Affiliated 
Member or Appointed Member if the Member has a Total Affiliated and/
or Appointed Priority Customer ADV of 50,000 contracts or more. See 
Options 7, Section 3, Table 1, note 2.
    \13\ The highest tier threshold attained applies retroactively 
in a given month to all eligible traded contracts and applies to all 
eligible market participants.
    \14\ See note 3 above.
---------------------------------------------------------------------------

Exchange Systems Disruptions
    The Exchange proposes to adopt two additional scenarios as 
``Unanticipated Events'' that the Exchange may determine to exclude 
from its Tier Calculations. First, the Exchange proposes to exclude 
days where the Exchange is inaccessible to members during the 30-minute 
period before the opening of trade (i.e., between 9:00 a.m. to 9:30 
a.m. Eastern Time) due to an Exchange system disruption, even if the 
Exchange does not instruct members to route away to other markets. As 
discussed above, the Exchange's current ability to remove days is 
limited to days where the market is not open for the entire trading 
day, and where the Exchange instructs members to route away to other 
markets. This allows the Exchange to exclude days, for example, where 
the Exchange honors a market-wide trading halt declared by another 
market, closes early for holiday observance, or instructs members to 
route away to other markets because of a systems issue in the morning, 
which ultimately does not carry over into the trading day. The Exchange 
notes, however, that it may not always instruct members to route away. 
For instance, the Exchange may be inaccessible to members in the 
morning due to a systems disruption but the Exchange resolves the issue 
shortly before 9:30 a.m. and as a result, the Exchange does not 
instruct members to route away. In such cases, the Exchange is not 
permitted to exclude the day from its ADV calculations. The Exchange 
generally experiences a high volume of member participation within the 
30-minute window leading up to the opening of trade from members who 
submit eligible interest be included in the Exchange's opening process. 
As a result, days where members are precluded from submitting eligible 
interest during this 30-minute time period due to an Exchange systems 
disruption, even if the issue is ultimately resolved by the Exchange 
before the market opens (and members

[[Page 4866]]

therefore are not instructed to route away), are likely to have lower 
trading volume. Including such days in calculations of ADV will 
therefore make it more difficult for members to achieve particular 
pricing tiers for that month. Accordingly, excluding such days will 
diminish the likelihood of a cost increase occurring because a member 
is not able to reach a pricing tier on that date that it would reach on 
other trading days during the month. Phlx currently has identical 
language allowing it to remove such days from its volume based 
tiers.\15\
---------------------------------------------------------------------------

    \15\ See id. at paragraph 2(C).
---------------------------------------------------------------------------

    Second, the Exchange proposes to exclude days where there is an 
Exchange system disruption that lasts for more than 60 minutes during 
regular trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time), even 
if such disruption would not be categorized as a complete outage of the 
Exchange's system. Such a disruption may occur where a certain options 
series traded on the Exchange is unavailable for trading due to an 
Exchange systems issue, or where the Exchange may be able to perform 
certain functions with respect to accepting and processing orders, but 
may have a failure to another significant process, such as routing to 
other market centers, that would lead members who rely on such 
processes to avoid using the Exchange until the Exchange's entire 
system was operational. The Exchange believes that certain system 
disruptions that are not complete system outages could preclude some 
members from submitting orders to the Exchange. The Exchange notes that 
this proposal is consistent with the rules of Phlx and other options 
exchanges.\16\
---------------------------------------------------------------------------

    \16\ See id. at paragraph 2(D). See also BATS [sic] BZX Options 
Exchange Fee Schedule (defining an ``Exchange System Disruption'' as 
any day that the exchange's system experiences a disruption that 
lasts for more than 60 minutes during regular trading hours); and 
NYSE Arca Options Fee Schedule (defining an ``Exchange System 
Disruption'' as a disruption affects an Exchange system that lasts 
for more than 60 minutes during regular trading hours).
---------------------------------------------------------------------------

    The Exchange believes that the two scenarios proposed above are 
reasonable and equitable because the intent of the current rule has 
always been to avoid penalizing members that might otherwise qualify 
for certain tiered pricing but that because of aberrant low volume days 
resulting, for instance, from Exchange systems disruptions, did not 
participate on the Exchange to the extent they might have otherwise 
participated.
    In addition, to avoid penalizing members that step up and trade on 
a day with artificially low volume, the Exchange currently only removes 
days for members that would have a lower ADV calculation with the day 
included (i.e., the better of rule). The Exchange believes that 
applying the better of rule to the proposed system disruption-related 
scenarios would be similarly helpful as it would ensure that members 
that continue to execute a large volume of contracts on such days are 
not inadvertently disadvantaged when the Exchange removes a systems 
disruption-related day from its calculations of ADV. This is consistent 
with the treatment of such days on Phlx.\17\
---------------------------------------------------------------------------

    \17\ See note 3 above at paragraph 3.
---------------------------------------------------------------------------

Categories of Excluded Days
    Similar to Phlx, the Exchange seeks to restructure the existing 
rule by separating out the different scenarios between days that are 
known in paragraph (1) and days that are not in paragraph (2), and 
define the latter as Unanticipated Events.
    For planned days, the Exchange proposes to further distinguish 
between days that the Exchange announces in advance that it will not be 
open for trading in paragraph (1)(A) (e.g., Thanksgiving), and 
Scheduled Early Closes in paragraph (1)(B) (e.g., the trading day after 
Thanksgiving). The Exchange notes that it currently considers Scheduled 
Early Closes as a subset of days that the market is not open for the 
entire trading day. The Exchange believes it would be more clear to 
distinguish Scheduled Early Closes in paragraph (1) as a day that is 
planned for in advance, and separately consider days that are not open 
for the entire trading day as Unanticipated Events in paragraph (2)(A). 
As proposed, (2)(A) would continue to cover unplanned days where the 
Exchange declares a trading halt in all securities or honors a market-
wide trading halt declared by another market. The other scenarios that 
will be categorized as Unanticipated Events in paragraph (2) are the 
two systems-related disruptions proposed above, and days that the 
Exchange instructs members in writing to route their orders to other 
markets, which is an existing scenario covered under the current rule 
as described above.
Exclusion of Days by Tier Calculation
    The Exchange proposes to further amend the existing rule to align 
with the Phlx rule by specifying how the days in paragraphs (1) and (2) 
will be excluded from its Tier Calculations. As it relates to days 
where the Exchange announces in advance that it will not be open for 
trading, the Exchange notes that it will exclude those days from all 
options tier calculations set forth in its Pricing Schedule.\18\ This 
is also the case today since no trading activity occurs on those days, 
and the Exchange is only clarifying its current practice within the 
proposed rule text in paragraph (1)(A).
---------------------------------------------------------------------------

    \18\ See id. at paragraph (1)(A) for similar language on Phlx.
---------------------------------------------------------------------------

    As discussed above, the Exchange currently removes Scheduled Early 
Closes as provided in paragraph (1)(B), and the Unanticipated Events in 
paragraphs (2)(A) and (2)(B), from its calculations of ADV only for 
members that would have a lower ADV with the day included. The Exchange 
is not changing how it currently excludes these days from the ADV 
calculations. And as further discussed above, the Exchange is proposing 
to adopt the same principle-based approach for excluding the two 
Unanticipated Events related to Exchange system disruptions as provided 
in paragraphs (2)(C) and (2)(D). Accordingly, the proposed language in 
paragraph (3)(A) will clarify for the ADV calculation that the Exchange 
may exclude any Scheduled Early Close or Unanticipated Event, subject 
to the better of rule.\19\
---------------------------------------------------------------------------

    \19\ See id. at paragraph (3)(A) for similar language on Phlx.
---------------------------------------------------------------------------

    Similar to Phlx, the proposal also adds a ``catch-all'' provision 
in paragraph (3)(B) that would apply to other applicable volume based 
tier calculations that are set forth in its Pricing Schedule, but are 
not specified within paragraph (3)(A) (i.e., not an ADV 
calculation).\20\ This catch-all provision will provide the Exchange 
with flexibility to apply the better of rule going forward to all 
pricing programs administered by the Exchange that are based on volume 
calculations. The Exchange believes that adopting a similar principle-
based approach for its options volume calculations would ensure that 
days are removed from such calculations only if doing so would be 
beneficial for the member. Accordingly, the proposed language will not 
apply to straight volume accumulations, as is the case today, and the 
Exchange will continue to not exclude days from such calculations as 
members do not benefit when volume executed on an excluded day is 
removed from straight volume accumulations.
---------------------------------------------------------------------------

    \20\ See id. at paragraph (3)(C) for similar language on Phlx.
---------------------------------------------------------------------------

Clarifying Changes
    The Exchange proposes to add further details similar to Phlx's rule 
to bring greater transparency as to how the Exchange will apply the 
better of rule when removing days from its Tier Calculations. In 
particular, the Exchange

[[Page 4867]]

proposes to make clear that it will only remove days pursuant to the 
better of rule by specifying in paragraphs (1)(B) and (2) that such 
days may be excluded from the Tier Calculations only pursuant to 
paragraph (3).\21\ Paragraph (3) will then provide that if a day is to 
be excluded as a result of paragraph (1)(B) or (2), the Exchange will 
be required to exclude the day from any member's monthly options volume 
tier calculations as detailed within paragraph (3).\22\ With the 
proposed changes, the Exchange seeks to clarify that it will exclude 
days from any member's Tier Calculations in a uniform manner to ensure 
that days are removed only in situations where the member benefits. The 
Exchange will look at each potential excluded day in a month and 
determine for every member their ADV or other applicable volume 
calculation based on their trading volume on that day. If any member 
would have a lower Tier Calculation with the particular day included, 
the Exchange will exclude that day for that member. This is how the 
Exchange applies the better of rule today for ADV calculations. As 
such, the proposed changes are intended to make clear that the Exchange 
will apply the better of rule in a uniform manner for all members, and 
that there is no arbitrary selection of ``winners'' or ``losers'' when 
the Exchange excludes days. In addition, the Exchange proposes to make 
two technical changes within the better of rule; first, to clarify that 
the rule applies in each case of the tier calculations specified in 
paragraph (3), and second, to use the defined term Tier Calculations 
instead of ADV to reflect the changes proposed herein.
---------------------------------------------------------------------------

    \21\ See id. at paragraphs (1)(B) and (2) for similar language 
on Phlx.
    \22\ See id. at paragraph (3) for similar language on Phlx.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\23\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\24\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is reasonable 
and equitable as it provides a new framework for removing days from the 
Exchange's volume calculations that the Exchange believes is beneficial 
to members and consistent with similar provisions already in place on 
Phlx. The proposed rule change would permit the Exchange to remove a 
day from its pricing tiers in more circumstances, and ensures that the 
Exchange will only do so in circumstances where beneficial for the 
member because the member would have a lower volume calculation the 
with the day included.
    By applying the rule to all volume based calculations rather than 
specified incentive programs based on Total Affiliated and/or Appointed 
Member ADV and Total Affiliated and/or Appointed Priority Customer ADV, 
the Exchange believes that members will be further protected if the 
Exchange experiences a systems or other issue that results in a day 
being excluded from the Exchange's volume calculations. Without this 
change, members would only have the day excluded for the specific ADV 
based pricing programs described above, and would not get the benefit 
for other un-enumerated programs.
    The Exchange believes it is reasonable and equitable to exclude a 
day from its volume based calculations when the Exchange's system 
experiences a disruption during the 30-minute period prior to the 
opening of trade that renders the Exchange inaccessible to members as 
this preserves the Exchange's intent behind adopting volume-based 
pricing. Without this change, members that are precluded from 
submitting eligible interest during the 30-minute window before the 
opening of trade may be negatively impacted, even if the Exchange 
resolves the issue before the market opens and as a result, does not 
instruct members to route away. The proposed change to exclude such 
days will diminish the likelihood of a cost increase occurring because 
a member is not able to reach a volume tier calculation on that date 
that it would reach on other trading days during the month.
    Similarly, excluding a day where the Exchange's system experiences 
a disruption that lasts for more than 60 minutes intra-day is 
reasonable and equitable because the proposal seeks to avoid penalizing 
members that might otherwise qualify for certain tiered pricing but 
that, because of an Exchange systems disruption, did not participate on 
the Exchange to the extent they might have otherwise participated. The 
Exchange believes that certain systems disruptions could preclude some 
members from sending order flow to the Exchange even if such issue is 
not actually a complete systems outage.
    In addition, the Exchange believes that it is reasonable and 
equitable to apply the better of rule to both systems disruption-
related scenarios. Without these changes, members that step up and 
trade significant volume on excluded trading days may be negatively 
impacted, resulting in an effective cost increase for those members. 
The proposal would align the Exchange's approach to how it applies this 
rule today for days where the market is not open for the entire trading 
day or where the Exchange instructs members to route away.
    Furthermore, the Exchange believes that categorizing the potential 
excluded days is reasonable and equitable because it will bring greater 
transparency to the application of its rule. Specifically, the Exchange 
is distinguishing between planned and unplanned days in paragraphs (1) 
and (2), defining the latter as Unanticipated Events, and stipulating 
how the Exchange will exclude such days pursuant to this rule. 
Categorizing days in this manner will clarify the application of its 
rule in light of the Exchange's proposal to expand the rule to adopt 
additional days that may be excluded from its tier calculations. 
Providing in paragraph (1)(A) that the Exchange will always exclude 
from its tier calculations days that it announces in advance it will 
not be open for trading will clarify current practice. Furthermore, the 
Exchange believes that the proposed changes to specify how days in 
paragraphs (1) and (2) may be excluded from its tier calculations will 
bring greater transparency by delineating the various circumstances in 
which the better of rule will apply. Providing in paragraph (3) that 
the Exchange may exclude any Scheduled Early Close or Unanticipated 
Event from the ADV and other Tier Calculations, subject to the better 
of rule, will make clear that the Exchange will take a consistent 
approach when excluding days for purposes of its volume based pricing 
tiers. In addition, having a catch-all in paragraph (3)(B) so that the 
better of rule applies to other options volume calculations than ADV to 
allow the Exchange to apply the rule going forward to all pricing 
programs based on volume calculations will further protect members. The 
Exchange notes that aberrant low volume days resulting from, for 
instance, an Unanticipated Event, impacts all volume-based 
calculations, and allowing the Exchange to exclude such days from any 
Tier Calculation if the member would have a lower Tier Calculation with 
the day included will further protect members from being inadvertently 
penalized.
    Furthermore, the proposed changes specifying that the days in 
paragraphs

[[Page 4868]]

(1)(B) and (2) may be excluded only pursuant to paragraph (3), and 
requiring the Exchange to exclude such days pursuant to the 
specifications in paragraph (3) will likewise make clear that the 
Exchange will take a consistent approach with respect to excluding days 
from its volume calculations. As discussed above, these modifications 
will clarify that the Exchange will apply the better of rule in a 
uniform manner to all members, and that there is no arbitrary selection 
of ``winners'' or ``losers.'' The Exchange also believes that the two 
technical changes proposed in the better of rule to reflect the changes 
proposed herein will likewise bring greater clarity to its rule.
    Finally, the Exchange further believes that the proposed rule 
change is not unfairly discriminatory because it will apply equally to 
all members. While the Exchange currently has rules in place for 
removing a day from its pricing, the Exchange believes that the 
proposed changes will benefit all members by providing more 
circumstances to remove a day, and ensuring that such days are removed 
only in situations where the member benefits.

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 proposed rule change is 
designed to protect members from the possibility of a cost increase by 
excluding days when overall member participation might be significantly 
lower than a typical trading day. The Exchange believes that the 
proposed modifications to its tier calculations are pro-competitive and 
will result in lower total costs to end users, a positive outcome of 
competitive markets. Furthermore, other options exchanges have adopted 
rules that are substantially similar to the Exchange's proposal.\25\
---------------------------------------------------------------------------

    \25\ See notes 3 and 16 above.
---------------------------------------------------------------------------

    The Exchange operates in a highly competitive market in which 
market participants can readily direct their order flow to competing 
venues. In such an environment, the Exchange must continually review, 
and consider adjusting, its fees and rebates to remain competitive with 
other exchanges. For the reasons described above, the Exchange believes 
that the proposed fee changes reflect this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or 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.\26\ 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: (i) Necessary or appropriate in the public 
interest; (ii) for the protection of investors; or (iii) 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-MRX-2019-01 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-MRX-2019-01. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-MRX-2019-01 and should be submitted on 
or before March 12, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02606 Filed 2-15-19; 8:45 am]
 BILLING CODE 8011-01-P


