[Federal Register Volume 84, Number 93 (Tuesday, May 14, 2019)]
[Notices]
[Pages 21371-21375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09859]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85808; File No. SR-MIAX-2019-22]


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 8, 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 April 29, 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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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 certain SPIKES transaction 
fees.
    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 adopted its initial SPIKES transaction fees on 
February 15,

[[Page 21372]]

2019.\3\ The Exchange now proposes to amend the Fee Schedule to adopt 
certain SPIKES transaction fees. Specifically, the Exchange proposes to 
adopt new fees for SPIKES Combinations \4\ in cPRIME,\5\ and to make 
minor non-substantive, technical changes to the Fee Schedule.
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    \3\ See Securities Exchange Release No. 85283 (March 11, 2019), 
84 FR 9567 (March 15, 2019) (SR-MIAX-2019-11). (The Exchange 
initially filed the proposal on February 15, 2019 (SR-MIAX-2019-04). 
That filing was withdrawn and replaced with (SR-MIAX-2019-11)).
    \4\ A ``Combination'' is a purchase (sale) of a SPIKES call 
option and the sale (purchase) of a SPIKES put option having the 
same expiration date and strike price.
    \5\ cPRIME is the process by which a Member may electronically 
submit a ``cPRIME Order'' (as defined in Exchange Rule 518(b)(7)) it 
represents as agent (a ``cPRIME Agency Order'') against principal or 
solicited interest for execution (a ``cPRIME Auction''). See 
Interpretation and Policy .12 of Exchange Rule 515A.
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SPIKES Combinations
    The Exchange is proposing to adopt a new fee table for SPIKES 
Combinations executed in cPRIME Auctions. As proposed, the Exchange 
will charge a SPIKES Combination executed in a cPRIME Auction on a per 
contract per leg basis, based on Origin. All Origins will be charged 
the same rate of $0.01 for Initiating, Contra, and Responder (with the 
exception of an Initiating Priority Customer which will be assessed a 
charge of $0.00) per contract per leg. As proposed, all Origins 
(Priority Customer, Market Maker, Non-MIAX Market Maker, Broker-Dealer, 
Firm Proprietary, and Public Customer that is Not a Priority Customer) 
will receive a $0.01 Break-up Credit.
    As proposed, the Combinations in cPRIME table will be as follows:

                                             Combinations in cPRIME
----------------------------------------------------------------------------------------------------------------
                     Origin                         Initiating        Contra         Responder       Break-up
----------------------------------------------------------------------------------------------------------------
Priority Customer...............................           $0.00           $0.01           $0.01         ($0.01)
Market Maker....................................            0.01            0.01            0.01          (0.01)
Non-MIAX Market Maker...........................            0.01            0.01            0.01          (0.01)
Broker-Dealer...................................            0.01            0.01            0.01          (0.01)
Firm Proprietary................................            0.01            0.01            0.01          (0.01)
Public Customer that is Not a Priority Customer.            0.01            0.01            0.01          (0.01)
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to make a minor non-substantive change to the 
Simple and Complex Fees table to edit footnote ``+'' by adding the 
sentence, ``The Complex Large Trade Discount does not apply to SPIKES 
Combination Orders,'' to the end of the footnote.
    As proposed, the Simple and Complex Fees table will be as follows:

                                                                Simple and Complex Fees 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Simple /        Simple /
                                        complex [yen]   complex [yen]                  13, Combination     Simple large trade      Complex large trade
                Origin                      maker           taker      Simple opening        ~ !          discount threshold +     discount threshold +
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer....................           $0.00           $0.00           $0.00            $0.00  0......................  0.
Market Maker.........................            0.00          * 0.20            0.15             0.01  First 10,000 contracts.  First 25,000 contracts.
Non-MIAX Market Maker................            0.10            0.25            0.15             0.01  First 10,000 contracts.  First 25,000 contracts.
Broker-Dealer........................            0.10            0.25            0.15             0.01  First 10,000 contracts.  First 25,000 contracts.
Firm Proprietary.....................            0.00          * 0.20            0.15             0.01  First 10,000 contracts.  First 25,000 contracts.
Public Customer that is Not a                    0.10            0.25            0.15             0.01  First 10,000 contracts.  First 25,000 contracts.
 Priority Customer.
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* Taker fees for options with a premium price of $0.10 or less will be charged $0.05 per contract.
~ A ``SPIKES Combination'' is a purchase (sale) of a SPIKES call option and sale (purchase) of a SPIKES put option having the same expiration date and
  strike price.
! The SPIKES Combination portion of a SPIKES Combination Order will be charged at the Combination rate and other legs will be charged at the Complex
  rate. 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 or Complex Large
  Trade Discount Threshold. This discount does not apply to Priority Customer orders, Maker orders, SPIKES Opening orders, and the Surcharge. For any
  SPIKES Combination Order, no fee shall apply to the number of contracts executed above the Complex Large Trade Discount Threshold. The Complex Large
  Trade Discount does not apply to SPIKES Combination Orders.
[yen] For quotes/orders in a Complex Auction, Priority Customer Complex Orders will receive the Complex Maker rate. Origins that are not a Priority
  Customer will be charged the applicable Complex Taker rate.

    The Exchange also proposes to make a minor non-substantive change 
to the PRIME \6\ and cPRIME Fees table to edit footnote ``d'' by adding 
the sentence, ``The cPRIME Large Trade Discount does not apply to 
SPIKES Combination Orders,'' to the end of the footnote. Additionally, 
the Exchange proposes to add explanatory text below the table
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    \6\ PRIME is a process by which a Member may electronically 
submit for execution (``Auction'') an order it represents as agent 
(``Agency Order'') against principal interest, and/or an Agency 
Order against solicited interest. See Exchange Rule 515A(a).

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[[Page 21373]]

that explains how fees and credits are charged and assessed for SPIKES 
in PRIME and for SPIKES in cPRIME. The Exchange notes that this text is 
substantially similar to existing text in the current Fee Schedule for 
PRIME \7\ and cPRIME \8\ for multi-listed symbols.
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    \7\ See MIAX Options Fee Schedule (1)(a)(v) MIAX Price 
Improvement Mechanism (``PRIME'') Fees.
    \8\ See MIAX Options Fee Schedule (1)(a)(vi) MIAX Complex Price 
Improvement Mechanism (``cPRIME'') Fees.
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    As proposed, the PRIME and cPRIME Fees table will be as follows:

                                                                                     PRIME and cPRIME Fees 
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                                                                                                             PRIME large trade discount threshold        cPRIME large trade discount threshold
                 Origin                     Initiating        Contra         Responder       Break-up                     [supcaret]                                    [diam]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Priority Customer.......................           $0.00           $0.20           $0.25         $(0.15)  First 10,000 contracts....................  First 25,000 contracts.
Market Maker............................            0.10            0.20            0.25          (0.15)  First 10,000 contracts....................  First 25,000 contracts.
Non-MIAX Market Maker...................            0.10            0.20            0.25          (0.15)  First 10,000 contracts....................  First 25,000 contracts.
Broker-Dealer...........................            0.10            0.20            0.25          (0.15)  First 10,000 contracts....................  First 25,000 contracts.
Firm Proprietary........................            0.10            0.20            0.25          (0.15)  First 10,000 contracts....................  First 25,000 contracts.
Public Customer that is Not a Priority              0.10            0.20            0.25          (0.15)  First 10,000 contracts....................  First 25,000 contracts.
 Customer.
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 An Index License Surcharge (``Surcharge'') of $0.075 will apply to any contract that is executed by an Origin except Priority Customer. The Surcharge applies per contract side per leg. The
  Surcharge will be waived for the ``Waiver Period'' which, for purposes of this Section (1)(a)(xi) of the Fee Schedule, means 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.
[caret] The transaction fee for SPIKES PRIME will be capped at 10,000 contracts from a single order, for the Agency Side and Contra Side independently. Contracts greater than the threshold
  will not be charged the transaction fee but will continue to be charged the Surcharge. Responder fees and Break-up Credits will not be capped.
[diam] The transaction fee for SPIKES cPRIME will be capped at 25,000 contracts that are traded per strategy from a single order, for the Agency Side and for the Contra Side independently.
  Contracts greater than the threshold will not be charged the transaction fee but will continue to be charged the Surcharge. Responder fees and Break-up Credits will not be capped. The cPRIME
  Large Trade Discount does not apply to SPIKES Combination Orders.
For SPIKES in PRIME, MIAX will assess the Responder to PRIME Auction Fee to: (i) A PRIME AOC Response that executes against a PRIME Order, and (ii) a PRIME Participating Quote or Order that
  executes against a PRIME Order. MIAX will apply the PRIME Break-up credit to the EEM that submitted the PRIME Order for agency contracts that are submitted to the PRIME Auction that trade
  with a PRIME AOC Response or a PRIME Participating Quote or Order that trades with the PRIME Order.
For SPIKES in cPRIME, all fees and credits are per contract per leg for Complex and Combination volume. Further, MIAX will assess the Responder to cPRIME Auction Fee to: (i) A cPRIME AOC
  Response that executes against a cPRIME Order, and (ii) a cPRIME Participating Quote or Order that executes against a cPRIME Order. MIAX will apply the cPRIME Break-up credit to the EEM that
  submitted the cPRIME Order for agency contracts that are submitted to the cPRIME Auction that trade with a cPRIME AOC Response or a cPRIME Participating Quote or Order that trades with the
  cPRIME Order.

    The proposed rule change is to become operative May 1, 2019.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \9\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \10\ in particular, in 
that it provides for the equitable allocation of reasonable dues, fees 
and other charges among Exchange Members \11\ 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 \12\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 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.
    \12\ 15 U.S.C. 78f(b)(5).
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SPIKES Combinations in cPRIME
    The Exchange believes that the proposed fee changes for SPIKES 
Combinations in cPRIME are consistent with Section 6(b)(4) of the Act 
in that they are reasonable, equitable, and not unfairly 
discriminatory. The proposed fee changes are reasonably designed as 
they align to the fees charged for SPIKES Combination orders under the 
Simple and Complex Fees table.\13\ Under the Simple and Complex Fees 
table all Market Maker, Non-MIAX Market Maker, Broker-Dealer, Firm 
Proprietary, and Public Customer that is Not a Priority Customer 
Origins are charged the same amount, $0.01 (Priority Customers are 
charged a fee of $0.00). 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

[[Page 21374]]

increase in order flow from other market participants.
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    \13\ See MIAX Options Exchange Fee Schedule (1)(a)(xi).
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    Similarly, under the Combinations in cPRIME Fee table all Market 
Maker, Non-MIAX Market Maker, Broker-Dealer, Firm Proprietary, and 
Public Customer that is Not a Priority Customer, Initiating Origins are 
charged the same amount, $0.01 (Initiating Priority Customers are 
charged a fee of $0.00). The Exchange believes that its fees are 
equitable and not unfairly discriminatory as all Contra and Responder 
Origin types (Priority Customer included) will be charged a fee of 
$0.01, and all Origin types will receive the same Break-up Credit of 
$0.01.
    The Exchange also believes that aligning the Combinations in cPRIME 
Fee table with the fees charged for Combination orders on the Exchange 
unifies the Exchange's fee structure for SPIKES Combination Orders, 
which benefits investors as it clarifies the Exchange's fees and 
reduces the risk of confusion.
    The proposed SPIKES Combination in cPRIME fees are reasonable, 
equitable, and not unfairly discriminatory because they will apply 
similarly 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 for cPRIME orders. Initiating Priority Customers 
orders are provided a discount as Priority Customer liquidity benefits 
all market participants by providing more trading opportunities, which 
attracts Market Makers. Contra, Responder, and Break-up credits are 
applied uniformly to each Origin; Priority Customer, Market Maker, Non-
MIAX Market Maker, Broker-Dealer, Firm Proprietary, and Public Customer 
that is Not a Priority Customer. All similarly situated categories of 
participants are subject to the same transaction fee and credit 
schedule, and access to the Exchange is offered on terms that are not 
unfairly discriminatory.
    The Exchange believes adding a footnote to the Simple and Complex 
Fees table stating that the Complex Large Trade Discount does not apply 
to SPIKES Combination Orders is reasonable, equitable, and not unfairly 
discriminatory as SPIKES Combination Orders are charged a substantially 
reduced fee as indicated on the Simple and Complex Fees table and do 
not need the benefit of the Complex Large Trade Discount as SPIKES 
Combination Orders are already substantially discounted.\14\ 
Additionally, the Exchange believes adding a footnote to the PRIME and 
cPRIME Fees table stating that the cPRIME Large Trade Discount does not 
apply to SPIKES Combination Orders is reasonable, equitable, and not 
unfairly discriminatory as SPIKES Combination Orders are charged a 
substantially reduced fee as indicated on the proposed Combinations in 
cPRIME table and do not need the benefit of the cPRIME Large Trade 
Discount as SPIKES Combination Orders are already substantially 
discounted. The Exchange believes providing this change benefits 
investors as it clarifies the Exchange's fees and reduces the risk of 
confusion.
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    \14\ See MIAX Options Fee Schedule (1)(a)(xi).
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    The non-substantive technical change proposed to the explanatory 
notes of the PRIME and cPRIME Fees table to add a description of how 
PRIME and cPRIME fees will be applied to SPIKES Orders promotes just 
and equitable principles of trade, removes impediments to and perfects 
the mechanism of a free and open market and a national market system, 
and, in general protects investors and the public interest by 
clarifying how PRIME and cPRIME fees and credits will be applied 
similarly to multi-listed symbols. Additionally, adding the explanatory 
text below the PRIME and cPRIME Fees table benefits investors as it 
promotes uniformity within the Exchange's Fee Schedule and clarifies 
the application of PRIME and cPRIME fees for SPIKES orders and other 
orders on the Exchange.

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 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.
    The Exchange notes that it operates in a highly competitive market 
in which market participants can readily favor competing venues and 
competing products 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 proposed 
rule change reflects this competitive environment because it is 
adjusting its fees in a manner that encourages market participants to 
provide liquidity in SPIKES index options.

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,\15\ and Rule 19b-4(f)(2) \16\ 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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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

[[Page 21375]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-MIAX-2019-22 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-2019-22. 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-2019-22 and should be submitted on 
or before June 4, 2019.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09859 Filed 5-13-19; 8:45 am]
 BILLING CODE 8011-01-P


