
[Federal Register Volume 84, Number 51 (Friday, March 15, 2019)]
[Notices]
[Pages 9567-9573]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04806]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85283; File No. SR-MIAX-2019-11]


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 11, 2019.
    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 February 28, 2019, Miami International 
Securities Exchange, LLC (``MIAX Options'' 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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[[Page 9568]]

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 ``Fee Schedule'') to adopt transaction fees and rebates 
for SPIKES index option orders and quotes (collectively ``orders''), 
and for transactions involving SPY options on SPIKES settlement day, as 
described below. The Exchange also proposes to make a technical 
clarification to its Fee Schedule.
    The Exchange initially filed the proposal on February 15, 2019 (SR-
MIAX-2019-04). That filing has been withdrawn and replaced with the 
current filing (SR-MIAX-2019-11).
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings, 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 the Fee Schedule to adopt 
transaction fees and rebates for SPIKES index options orders, and for 
transactions involving SPY options on SPIKES settlement day, as 
described below. The Exchange also proposes to make a technical 
clarification to its Fee Schedule. The Exchange notes, by way of 
background, that on June 28, 2018, the Exchange filed with the 
Commission a proposal to list and trade on the Exchange, options on the 
SPIKESTM Index, a new index that measures expected 30-day 
volatility of the SPDR S&P 500 ETF Trust (commonly known and referred 
to by its ticker symbol, ``SPY'').\3\ Accordingly, the Exchange is 
proposing to adopt transaction fees and rebates that will apply to 
Exchange Members \4\ for transactions involving SPIKES index options, 
and for transactions involving SPY options on SPIKES settlement day. 
All order fees will be charged on a per contract per side basis.
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    \3\ See Securities Exchange Act Release No. 84417 (October 12, 
2018), 83 FR 52865 (October 18, 2018) (SR-MIAX-2018-14) (Order 
Granting Approval of a Proposed Rule Change by Miami International 
Securities Exchange, LLC to List and Trade on the Exchange Options 
on the SPIKES\TM\ Index).
    \4\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
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    The Exchange proposes to exclude SPIKES index options volume from a 
variety of fee and rebate programs and their calculation, in the Fee 
Schedule. Specifically, SPIKES index options volume will not count 
towards: the Priority Customer Rebate Program, the Market Maker 
Transaction Fees Sliding Scale of fees and rebates, or the Professional 
Rebate Program. The Exchange notes the reason a proprietary product 
would often be included in or excluded from certain programs is because 
the Exchange has expended considerable resources to develop and 
maintain a proprietary product, such as SPIKES. Thus, the Exchange 
proposes to make technical clarifications to existing fee and rebate 
programs to exclude SPIKES index options volume from such programs. 
Lastly, the Exchange proposes to adopt new Section 1)a)xi), SPIKES, on 
the Fee Schedule to establish transaction fees and rebates that the 
Exchange will assess for transactions in SPIKES index options.
Simple and Complex Fees
    The Exchange is proposing to adopt new Section (1)(a)(xi), SPIKES, 
on the Fee Schedule to establish transaction fees and rebates for 
executions in SPIKES index options for different Origin types. More 
specifically, the Exchange is proposing both Maker and Taker fees for 
Simple orders, and fees for Simple Opening orders. Market participants 
that place resting liquidity, i.e., quotes or orders on the MIAX 
Options System,\5\ are assessed the ``maker'' fee (each a ``Maker''). 
Market participants that execute against (remove) resting liquidity are 
assessed a higher ``taker'' fee (each a ``Taker''). This is 
distinguished from traditional maker-taker models where makers 
typically receive a rebate and takers are assessed a fee; the Exchange 
instead assesses lower transaction fees to its Makers as compared to 
its Takers, similar to the manner implemented at other exchanges.\6\ As 
an incentive for market participants to provide liquidity on the 
Exchange, the Exchange's Maker fees are lower than its Taker fees.
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    \5\ The term ``System'' means the automated trading system used 
by the Exchange for the trading of securities. See Exchange Rule 
100.
    \6\ The Exchange notes that similar maker-taker pricing is 
implemented at Nasdaq ISE Options 7, Section 3, Regular Order Fees 
and Rebates.
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    With respect to Simple Maker fees, the Exchange proposes that 
Priority Customers,\7\ Market Makers, and Firm Proprietary orders will 
be charged a $0.00 fee; and that Non-MIAX Market Makers, Broker-
Dealers, and Public Customers that are not Priority Customers be 
charged a $0.10 fee. With respect to Simple Taker fees, the Exchange 
proposes that Priority Customers will be charged a $0.00 fee; Non-MIAX 
Market Makers, Broker-Dealers, and Public Customers that are not 
Priority Customers be charged a $0.25 fee; and Market Makers and Firm 
Proprietary orders be charged a $0.20 fee. Additionally, the Exchange 
proposes that Taker fees for options with a premium price of $0.10 or 
less will be charged $0.05 per contract, with respect to Market Makers 
and Firm Proprietary orders, which is similar to the pricing model used 
by the Cboe Exchange, Inc. (``Cboe'').\8\ Furthermore, for Simple 
Opening orders, the Exchange proposes that Priority Customers be 
charged a $0.00 fee; and Market Makers, Non-MIAX Market Makers, Broker-
Dealers, Firm Proprietary orders, and Public Customers that are not 
Priority Customers be charged a $0.15 fee. Additionally, the Exchange 
proposes to charge a per contract, per leg fee for complex orders which 
will be $0.01 for Marker Makers, Non-MIAX Market Makers, Broker-
Dealers, Firm Proprietary orders, and Public Customers that are not 
Priority Customers. The Exchange proposes to charge a $0.00 fee for 
Priority Customer complex orders. The Exchange is not proposing a 
different Maker and Taker fee for each Origin type. Instead, the 
Exchange will assess one per contract, per leg fee of $0.01 for complex 
orders.
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    \7\ A ``Priority Customer'' means a person or entity that (i) is 
not a broker or dealer in securities, and (ii) does not place more 
than 390 orders in listed options per day on average during a 
calendar month for its own beneficial accounts(s). A ``Priority 
Customer Order'' means an order for the account of a Priority 
Customer.
    \8\ See Cboe Exchange, Inc. Fee Schedule, Pg.2.
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    Finally, with respect to Simple and Complex fees, the Exchange 
proposes a Simple/Complex Large Trade Discount. An order/quote that 
exceeds the size threshold, tied to a Single Order/Quote ID, will have 
the relevant fees apply to the contracts at and below the size 
threshold for Simple and Complex

[[Page 9569]]

volume; no fees shall apply to the number of contracts executed above 
the threshold, with certain exceptions. For example, the Large Trade 
Discount does not apply to volume from Priority Customer orders, Maker 
orders, SPIKES Opening orders, and the Surcharge. Specifically, the 
Exchange proposes that, for any single order/quote, no fee shall apply 
to the number of contracts executed above the first 175,000 contracts 
for Market Makers, Non-MIAX Market Makers, Broker-Dealers, Firm 
Proprietary orders, and Public Customers that are not Priority 
Customers. The Exchange does not propose that such a discount apply to 
Priority Customer orders because, as proposed, the Exchange is 
currently charging Priority Customers a $0.00 fee for these volume 
segments.
    The Exchange believes that the proposed transaction fees for Simple 
and Complex orders on SPIKES index options are reasonable, and have 
been set at an initial level that is favorable to market participants 
and are designed to encourage market participants to provide liquidity 
for SPIKES index options on the Exchange. As proposed, the SPIKES 
Simple and Complex transaction fee table will be as follows:

                                             Simple and Complex Fees
----------------------------------------------------------------------------------------------------------------
                                                                                                 Simple/complex
                                                                                                   large trade
            Origin               Simple maker    Simple taker   Simple opening     Complex ~        discount
                                                                                                   threshold +
----------------------------------------------------------------------------------------------------------------
Priority Customer.............           $0.00           $0.00           $0.00           $0.00  0.
Market Maker..................            0.00          * 0.20            0.15            0.01  First 175,000
                                                                                                 contracts.
Non-MIAX Market Maker.........            0.10            0.25            0.15            0.01  First 175,000
                                                                                                 contracts.
Broker-Dealer.................            0.10            0.25            0.15            0.01  First 175,000
                                                                                                 contracts.
Firm Proprietary..............            0.00          * 0.20            0.15            0.01  First 175,000
                                                                                                 contracts.
Public Customer that is Not a             0.10            0.25            0.15            0.01  First 175,000
 Priority Customer.                                                                              contracts.
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* Taker fees for options with a premium price of $0.10 or less will be charged $0.05 per contract.
~ All fees are per contract per leg.
+ Tied to Single Order/Quote ID. For any single order/quote, no fee shall apply to the number of contracts
  executed above the Simple/Complex Large Trade Discount Threshold. This discount does not apply to Priority
  Customer orders, Maker orders, SPIKES Opening orders, and the Surcharge.

PRIME and cPRIME Fees
    As part of the Exchange's proposal to adopt new Section (1)(a)(xi), 
the Exchange further proposes to establish transaction fees related to 
PRIME and cPRIME orders in SPIKES. Specifically, the Exchange proposes 
to establish a fee for initiating orders in the amount of $0.10 for 
Market Makers, Non-MIAX Market Makers, Broker-Dealers, Firm Proprietary 
orders, and Public Customers that are not Priority Customers. The 
Exchange proposes to charge Priority Customers a fee of $0.00 for 
initiating orders. Further, the Exchange proposes to establish a fee 
for contra-side orders for all Origin types in the amount of $0.20 and 
a fee for responder-side orders in the amount of $0.25. Finally, the 
Exchange proposes to establish a break-up credit for all Origin types 
in the amount of $0.15. With all of the proposals, the SPIKES PRIME and 
cPRIME transaction fee table will be as follows:

                                              PRIME and cPRIME Fees
----------------------------------------------------------------------------------------------------------------
                     Origin                         Initiating        Contra         Responder       Break-up
----------------------------------------------------------------------------------------------------------------
Priority Customer...............................           $0.00           $0.20           $0.25         ($0.15)
Market Maker....................................            0.10            0.20            0.25          (0.15)
Non-MIAX Market Maker...........................            0.10            0.20            0.25          (0.15)
Broker-Dealer...................................            0.10            0.20            0.25          (0.15)
Firm Proprietary................................            0.10            0.20            0.25          (0.15)
Public Customer that is Not a Priority Customer.            0.10            0.20            0.25          (0.15)
----------------------------------------------------------------------------------------------------------------

Surcharge
    The Exchange further proposes to establish an Index License 
Surcharge (``Surcharge'') of $0.075. The Surcharge will apply to any 
contract that is executed by an Origin except Priority Customer in 
Simple, Complex, PRIME and cPRIME, and will apply per contract side, 
per leg in order to recoup the costs associated with listing this 
proprietary product. Other exchanges charge a similar fee for 
proprietary index options.\9\ The Exchange notes, however, that the 
Surcharge will be waived for the ``Waiver Period.'' The Exchange 
proposes to define ``Waiver Period'' to mean, for purposes of Section 
(1)(a)(xi) of the Fee Schedule, the period of time from the launch of 
trading of SPIKES options until such time that the Exchange submits a 
filing to terminate the Waiver Period. The Exchange will issue a 
Regulatory Circular announcing the end of the Waiver Period at least 
fifteen (15) days prior to the termination of the Waiver Period and 
effective date of such Surcharge.
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    \9\ See Cboe Exchange, Inc Fee Schedule, Specified Proprietary 
Index Options Rate Table--Underlying Symbol List A and Sector 
Indexes; see also Nasdaq ISE Options 7, Section 5 C.
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SPIKES Settlement Day SPY Opening Auction Fees in SPY Options
    The Exchange further proposes to adopt fees for the Opening Process 
in SPY options that will only be applicable on SPIKES settlement day. 
Specifically, these fees will be charged to each side of all trades 
occurring in the SPY Opening in the expiration month used to determine 
SPIKES settlement on settlement day only; in lieu of any other fees in 
the Fee Schedule. To be clear, volume in settlement day SPY Opening 
options, as they are still multiply-listed, will continue to count 
towards the volume calculation of the variety of fee and rebate 
programs as noted above.

[[Page 9570]]

The purpose for adopting lower, separate fees for these SPY 
transactions is to encourage Market Makers and other market 
participants that need to unwind a SPIKES hedge to participate in the 
Opening Auction, by making the pricing more attractive. Specifically, 
market participants holding short, hedged SPIKES options could 
liquidate that hedge by selling their SPY options series, while traders 
holding long, hedged SPIKES options could liquidate their hedge by 
buying SPY option series. These market participants may liquidate their 
hedges by submitting SPIKES strategy orders in the appropriate SPY 
option series during the SPIKES Special Settlement Auction \10\ on the 
SPIKES expiration/final settlement date. The fees will be assessed as 
follows:
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    \10\ See Exchange Rule 503, Interpretations and Policies .03.

             SPIKES Settlement Day SPY Opening Auction Fees
------------------------------------------------------------------------
                                                            SPY opening
                         Origin                               orders
                                                             [curren]
------------------------------------------------------------------------
Priority Customer.......................................           $0.00
Market Maker............................................            0.03
Non-MIAX Market Maker...................................            0.06
Broker-Dealer...........................................            0.06
Firm Proprietary........................................            0.03
Public Customer that is Not a Priority Customer.........            0.06
------------------------------------------------------------------------
[curren] These fees will be charged to each side of all trades occurring
  in the SPY opening in the expiration month used to determine SPIKES
  settlement on settlement day only; in lieu of any other fees in the
  Fee Schedule.

Technical Clarification
    The Exchange also proposes to make a technical clarification to the 
explanatory paragraph below the Market Maker Transaction Fees, Market 
Maker Sliding Scale, Members and Their Affiliates Not In Priority 
Customer Rebate Program Volume Tier 3 or Higher fee table, located in 
Section (1)(a)(i) of the Fee Schedule. Currently, the first sentence of 
the explanatory paragraph provides that ``[v]olume thresholds are based 
on the total national Market Maker volume of any options classes with 
traded volume on MIAX during the month in simple and complex orders 
(excluding QCC and cQCC Orders, PRIME and cPRIME AOC Responses, and 
unrelated MIAX Market Maker quotes or unrelated MIAX Market Maker 
orders that are received during the Response Time Interval and executed 
against the PRIME Order (``PRIME Participating Quotes or Orders'') and 
unrelated MIAX Market Maker complex quotes or unrelated MIAX Market 
Maker complex orders that are received during the Response Time 
Interval and executed against a cPRIME Order (``cPRIME Participating 
Quote or Order'')).'' In order to clarify that this explanatory 
paragraph would not apply to singly-listed options on the SPIKES Index, 
the Exchange proposes to modify this sentence as follows: ``[v]olume 
thresholds are based on the total national Market Maker volume of any 
multiply-listed options classes with traded volume on MIAX during the 
month in simple and complex orders (excluding QCC and cQCC Orders, 
PRIME and cPRIME AOC Responses, and unrelated MIAX Market Maker quotes 
or unrelated MIAX Market Maker orders that are received during the 
Response Time Interval and executed against the PRIME Order (``PRIME 
Participating Quotes or Orders'') and unrelated MIAX Market Maker 
complex quotes or unrelated MIAX Market Maker complex orders that are 
received during the Response Time Interval and executed against a 
cPRIME Order (``cPRIME Participating Quote or Order'')),'' by adding 
the words ``multiply-listed.'' The Exchange believes that by adding 
this additional wording, it will be clear that the volume in singly-
listed options is not counted towards reaching the Market Maker Sliding 
Scale Tier thresholds of both tables.
    Further, the Exchange notes that Section 2 of the Fee Schedule, 
Regulatory Fees, generally applies to transactions in options. However, 
Section (2)(a), Sales Value Fee, will not be assessed to transactions 
in SPIKES index options because pursuant to 17 CFR 240.31, ``[a]ny sale 
of an option on a security index (including both a narrow-based 
security index and a non-narrow-based security),'' is an exempt sale, 
and therefore, not subject to the Sales Value Fee.
    Finally, the fees found in Section 3, Membership Fees, Section 4, 
Testing and Certification Fees, Section 5, System Connectivity Fees, 
and Section 6, Market Data Fees, will all be applicable to transactions 
in SPIKES index options and will be treated like any other class of 
options.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \11\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \12\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among Exchange Members and 
issuers and other persons using its facilities. The Exchange also 
believes the proposal furthers the objectives of Section 6(b)(5) of the 
Act \13\ in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
of a free and open market and a national market system, and, in general 
to protect investors and the public interest and is not designed to 
permit unfair discrimination between customer, issuers, brokers and 
dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed fee structure for 
transactions in SPIKES index options is consistent with Section 6(b)(4) 
of the Act in that it is reasonable, equitable and not unfairly 
discriminatory. The proposed fee structure is reasonably designed 
because it is intended to incentivize market participants to transact 
in SPIKES index options on the Exchange, which enables the Exchange to 
improve its overall competitiveness and strengthen its market quality 
for all market participants. The Exchange believes that the proposed 
maker-taker model is an important competitive tool for exchanges and, 
directly or indirectly, can provide better prices for investors. The 
Exchange will assess lower transaction fees to its Makers as compared 
to its Takers as an incentive for market participants to provide 
liquidity on the Exchange. The Exchange believes this will encourage 
greater order flow from all market participants, which will in turn 
bring greater volume and liquidity to the Exchange, which benefits all 
market participants by providing more trading opportunities and tighter 
spreads. SPIKES index option transaction fees are also reasonably 
designed because the proposed fees and rebates are similar to the ones 
the Exchange assesses for multiply-listed options, and are within the 
range of fees and rebates assessed by other exchanges employing similar 
fee structures for singly-listed options.\14\ Other competing exchanges 
offer different fees and rebates for transactions in singly-listed 
options in a manner similar to this proposal.\15\
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    \14\ See supra notes 6, 8 and 9.
    \15\ See id.
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    The fee and rebate structure is reasonable, equitable, and not 
unfairly discriminatory because it will apply equally to Priority 
Customer orders, Market Maker orders, Non-MIAX Market Maker orders, 
Broker Dealer orders, Firm Proprietary orders, and Public Customers 
that are not Priority Customers orders, in each respective category of 
SPIKES index option orders;

[[Page 9571]]

for both Simple and Complex orders, and PRIME and cPRIME orders, and 
for transactions involving SPY options on SPIKES settlement day. All 
similarly situated categories of participants are subject to the same 
transaction fee and rebate schedule, and access to the Exchange is 
offered on terms that are not unfairly discriminatory.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to adopt fees for the Opening Process in SPY options 
that will only be applicable on SPIKES settlement day to encourage 
Market Makers and other market participants that need to unwind a 
SPIKES hedge to participate in the Opening Auction, by making the 
pricing more attractive. Specifically, market participants holding 
short, hedged SPIKES options could liquidate that hedge by selling 
their SPY options series, while traders holding long, hedged SPIKES 
options could liquidate their hedge by buying SPY option series. These 
market participants may liquidate their hedges by submitting SPIKES 
strategy orders in the appropriate SPY option series during the SPIKES 
Special Settlement Auction on the SPIKES expiration/final settlement 
date.
    The exchanges in general have historically aimed to improve markets 
for investors and develop various features within market structure for 
customer benefit. The Exchange assesses Priority Customers lower or no 
transaction 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. 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.
    The Exchange believes that it is equitable and not unfairly 
discriminatory that Firm Proprietary orders are assessed lower Maker 
and Taker fees for Simple orders, and for transactions involving SPY 
options on SPIKES settlement day, than other Origin types because the 
Exchange believes that Firm Proprietary order flow enhances liquidity 
on the Exchange for the benefit of all market participants. 
Specifically, Firm Proprietary order flow liquidity benefits all market 
participants by providing more robust trading opportunities, which 
attract Market Makers. An increase in the activity of those market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants. The Maker and Taker fees offered to Firm Proprietary 
orders are intended to attract more Firm Proprietary order volume to 
the Exchange. Moreover, all fee amounts listed as applying to Firm 
Proprietary orders will be applied equally to all Firm Proprietary 
Orders.
    The Exchange further believes that it is equitable and not unfairly 
discriminatory to assess lower Maker and Taker fees to Market Makers 
for Simple orders, and for transactions involving SPY options on SPIKES 
settlement day, as compared to other market participants because Market 
Makers, unlike other market participants, take on a number of 
obligations, including quoting obligations that other market 
participants do not have. Further, Market Makers have added market 
making and regulatory requirements, which normally do not apply to 
other market participants. For example, Market Makers have obligations 
to maintain continuous markets, engage in a course of dealings 
reasonably calculated to contribute to the maintenance of a fair and 
orderly market, and to not make bids or offers or enter into 
transactions that are inconsistent with a course of dealing. Further, 
these lower Maker and Taker fees offered to Market Makers are intended 
to incent Market Makers to quote and trade more on the Exchange, 
thereby providing more liquidity and trading opportunities for all 
market participants. Additionally, the proposed Maker and Taker fees 
for Market Makers will be applied equally to all Market Makers It 
should also be noted that all fee amounts described herein are intended 
to attract greater order flow to the Exchange in SPIKES options, which 
should therefore serve to benefit all Exchange market participants.
    The Exchange further believes that its proposal to charge a 
Surcharge of $0.075, which applies to any contract that is executed by 
an Origin except Priority Customer in Simple, Complex, PRIME and 
cPRIME, is reasonable because it will help recoup costs associated with 
listing a proprietary product. Further, the Exchange believes the 
Surcharge is equitable and not unfairly discriminatory because the 
Exchange will apply the same Surcharge for all similarly situated 
Members in a similar manner. The Exchange also believes it is equitable 
and not unfairly discriminatory to not assess the Surcharge to Priority 
Customer orders in SPIKES options because Priority Customer orders 
bring valuable liquidity to the market, which in turn benefits other 
market participants. Other exchanges charge a similar fee for 
proprietary index options.\16\ The Exchange believes that establishing 
a Waiver Period for application of the Surcharge is reasonable, 
equitable, and not unfairly discriminatory because it provides an 
incentive for Members to send orders to the Exchange, as the Surcharge 
fee will not apply during the Waiver Period. All similarly situated 
categories of participants are subject to the same Waiver Period, and 
access to the Exchange is offered on terms that are not unfairly 
discriminatory.
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    \16\ See supra note 9.
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    Moreover, the Exchange believes that assessing all other market 
participants that are not Priority Customers a higher transaction fee 
than Priority Customers for orders in SPIKES index options is 
reasonable, equitable, and not unfairly discriminatory because these 
types of market participants are more sophisticated and have higher 
levels of order flow activity and system usage. This level of trading 
activity draws on a greater amount of system resources than that of 
Priority Customers. Further, the Exchange believes it is equitable and 
not unfairly discriminatory to assess all other market participants 
that are not Priority Customers, Market Makers, or Firm Proprietary 
orders a higher Simple Maker fee for orders in SPIKES options because 
Priority Customers, Market Makers, and Firm Proprietary orders bring 
valuable liquidity to the market. 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, which in turn benefits the market as a whole.
    The Exchange believes that excluding singly-listed transactions 
from the number of options contracts executed on the Exchange by any 
Member for purposes of the volume thresholds in multiply-listed options 
transactions is reasonable, equitable, and not unfairly discriminatory 
because participating Members could otherwise collect the rebates 
offered and meet volume thresholds for the programs that did not 
contemplate singly-listed volume at the time of creation, and which 
have different transaction fees charged on the Exchange.
    The Exchange believes that the proposed technical changes are 
consistent with Section 6(b)(5) of the Act because they are designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanisms of a free and

[[Page 9572]]

open market and a national market system and, in general to protect 
investors and the public interest. The Exchange believes it is 
appropriate to make the proposed technical changes to its Fee Schedule 
so that Exchange Members have a clear and accurate understanding of the 
meaning and application of the Exchange's Fee Schedule.
    The Exchange believes that charging lower Taker fees to Market 
Makers and Firm Proprietary orders for options that have a premium 
price of $0.10 or less (such options are charged $0.05 per contract, 
versus $0.20 per contract) is reasonable, equitable, and not unfairly 
discriminatory because otherwise such fees could be greater than the 
option premium itself. The Exchange believes that it is equitable and 
not unfairly discriminatory to assess lower Taker fees to Market Makers 
as compared to Non-MIAX Market Makers and Broker-Dealers because Market 
Makers, unlike other market participants, take on a number of 
obligations, including quoting obligations that other market 
participants do not have. Further, Market Makers have added market 
making and regulatory requirements, which normally do not apply to 
other market participants. For example, Market Makers have obligations 
to maintain continuous markets, engage in a course of dealings 
reasonably calculated to contribute to the maintenance of a fair and 
orderly market, and to not make bids or offers or enter into 
transactions that are inconsistent with a course of dealing. Non-MIAX 
Market Makers and Broker-Dealers tend to be takers of liquidity, as 
opposed to providers of liquidity.
    Additionally, the Exchange believes that it is equitable and not 
unfairly discriminatory to assess lower Taker fees to Firm Proprietary 
orders for options that have a premium price of $0.10 or less (such 
options are charged $0.05 per contract, versus $0.20 per contract), as 
compared to Non-MIAX Market Makers and Broker-Dealers because Firm 
Proprietary order flow enhances liquidity on the Exchange for the 
benefit of all market participants. Specifically, Firm Proprietary 
order flow liquidity benefits all market participants (as Firm 
Proprietary orders are generally providers of liquidity) by providing 
more robust trading opportunities, which attract Market Makers and 
Priority Customers. An increase in the activity of those market 
participants in turn facilitates tighter spreads, which may cause an 
additional corresponding increase in order flow from other market 
participants. The lower Taker fees offered to Firm Proprietary orders 
are intended to attract more Firm Proprietary order volume to the 
Exchange. Non-MIAX Market Makers and Broker-Dealers tend to be takers 
of liquidity, as opposed to providers of liquidity. The Exchange notes 
that Cboe also has similar pricing in place for its VIX options where 
it does not provide a discount to non-market makers and broker-
dealers.\17\
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    \17\ See Cboe Fees Schedule, p. 2, Specified Proprietary Options 
Rate Table--Underlying Symbol List A and Sector Indexes.
---------------------------------------------------------------------------

    The Exchange believes that offering Members a Large Trade Discount 
is reasonable, equitable, and not unfairly discriminatory because it 
provides an incentive for Members to submit large sized liquidity to 
the Exchange, which will benefit all market participants. All similarly 
situated categories of participants are subject to the same discount 
(except for Priority Customers which are not charged a transaction fee 
otherwise, so no discount is necessary), and access to the Exchange is 
offered on terms that are not unfairly discriminatory.
    The PRIME and cPRIME fee and rebate structure is reasonable, 
equitable, and not unfairly discriminatory because it will apply 
equally to Priority Customer orders, Market Maker orders, Non-MIAX 
Market Maker orders, Broker Dealer orders, Firm Proprietary orders, and 
Public Customers that are not Priority Customers orders, in each 
respective category of PRIME and cPRIME orders. All similarly situated 
categories of participants are subject to the same transaction fee and 
rebate schedule, and access to the Exchange is offered on terms that 
are not unfairly discriminatory. The PRIME and cPRIME fee and rebate 
structure is reasonably designed because it is intended to incentivize 
market participants to send complex orders in SPIKES options to the 
Exchange in order to participate in the price improvement mechanism in 
a manner that enables the Exchange to improve its overall 
competitiveness and strengthen its market quality for all market 
participants.
    The fee and rebate structure for transactions involving SPY Opening 
orders for options that are used in the calculation of the SPIKES Index 
on final settlement day is reasonable, equitable, and not unfairly 
discriminatory because it will apply equally to Priority Customer 
orders, Market Maker orders, Non-MIAX Market Maker orders, Broker 
Dealer orders, Firm Proprietary orders, and Public Customers that are 
not Priority Customers orders, in each respective category of such 
orders. All similarly situated categories of participants are subject 
to the same transaction fee and rebate schedule, and access to the 
Exchange is offered on terms that are not unfairly discriminatory.
    The Exchange believes that it is equitable and not unfairly 
discriminatory to adopt fees for the Opening Process in SPY options 
that will only be applicable on SPIKES settlement day to encourage 
Market Makers and other market participants that need to unwind a 
SPIKES hedge to participate in the Opening Auction, by making the 
pricing more attractive. Specifically, market participants holding 
short, hedged SPIKES options could liquidate that hedge by selling 
their SPY options series, while traders holding long, hedged SPIKES 
options could liquidate their hedge by buying SPY option series. These 
market participants may liquidate their hedges by submitting SPIKES 
strategy orders in the appropriate SPY option series during the SPIKES 
Special Settlement Auction on the SPIKES expiration/final settlement 
date.

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 
proposed change will enhance the competitiveness of the Exchange 
relative to other exchanges that offer their own singly-listed 
products. The Exchange believes that the proposed fees and rebates for 
transactions in SPIKES index options, and for transactions involving 
SPY options on SPIKES settlement day, are not going to have an impact 
on intra-market competition based on the total cost for participants to 
transact in such order types versus the cost for participants to 
transact in other order types available for trading on the Exchange. As 
noted above, the Exchange believes that the proposed pricing for 
transactions in SPIKES index options, and for transactions involving 
SPY options on SPIKES settlement day, is comparable to and within the 
range of fees and rebates charged by the Exchange's competitors 
offering singly-listed products.\18\
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    \18\ See supra notes 6, 8 and 9.
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    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

[[Page 9573]]

fees to remain competitive with other exchanges and to attract order 
flow to the Exchange. The Exchange believes that the proposed rule 
change reflects this competitive environment because it establishes a 
fee structure in a manner that encourages market participants to direct 
their order flow, to provide liquidity, and to attract additional 
transaction volume to the Exchange.

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,\19\ and Rule 19b-4(f)(2) \20\ thereunder. 
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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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4(f)(2).
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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-2019-11 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-2019-11. 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-MIAX-2019-11 and should be submitted on 
or before April 5, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04806 Filed 3-14-19; 8:45 am]
BILLING CODE 8011-01-P


