[Federal Register Volume 85, Number 227 (Tuesday, November 24, 2020)]
[Notices]
[Pages 75064-75070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25898]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90455; File No. SR-MRX-2020-21]


Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Pricing Schedule

November 18, 2020.
    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 November 6, 2020, Nasdaq MRX, LLC (``MRX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I and II 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 proposes to amend its Pricing Schedule at Options 7, 
Section 1, ``General Provisions,'' to permit certain affiliated market 
participants to aggregate volume and qualify for certain pricing 
incentives. Additionally, the Exchange proposes to amend Options 7, 
Section 3, ``Regular Order Fees and Rebates;'' Options 7, Section 4, 
``Complex Order Fees;'' Options 7, Section 5, ``Other Options Fees and 
Rebates;'' Options 7, Section 7, ``Market Data;'' and Options 7, 
Section 8, ``Connectivity Fees.''
    The Exchange originally filed the proposed pricing change on 
October 26, 2020 (SR-MRX-2020-17). On November 6, 2020, the Exchange 
withdrew that filing and submitted this filing.

[[Page 75065]]

    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/mrx/rules, 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 Exchange proposes to amend Options 7, Section 1, ``General 
Provisions''; Options 7, Section 3, ``Regular Order Fees and Rebates;'' 
Options 7, Section 4, ``Complex Order Fees;'' Options 7, Section 5, 
``Other Options Fees and Rebates;'' Options 7, Section 7, ``Market 
Data;'' and Options 7, Section 8, ``Connectivity Fees.'' Each change 
will be discussed below.
Options 7, Section 1
    The Exchange proposes to replace the Appointed Member Program with 
an aggregation program offered today on ISE for an Affiliated Entity. 
Specifically, the Exchange proposes to permit Affiliated Entities to 
aggregate certain volume for purposes of receiving discounted fees. 
Nasdaq ISE, LLC (``ISE'') also permits Affiliated Entities to aggregate 
volume for purposes of qualifying for certain pricing.\3\ This 
replacement program is intended to harmonize MRX's program to ISE's 
program for purposes of permitting the Exchange to administer both 
programs in the same fashion. The Exchange notes that a key difference 
in these two programs is that today a Member on MRX can benefit from 
both the Appointed Member and the Affiliated Member aggregations for 
purposes of achieving more favorable pricing. With the proposed 
Affiliated Entity program, a Member would have to elect either the 
Affiliated Entity or Affiliated Member program during the same time 
period. This difference is discussed in more detail below.
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    \3\ See ISE Options 7, Section 1.
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    Today, MRX offers an Appointed Member \4\ an opportunity to lower 
fees by aggregating eligible volume from an Appointed Order Flow 
Provider \5\ with a designated Appointed Market Maker \6\ to determine 
tier eligibility within Table 3 of Options 7, Section 3 and determine 
eligibility for Market Maker Taker Fees within Options 7, Section 3, as 
described in note 2 of the Pricing Schedule (``Appointed Member 
Program'').
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    \4\ An ``Appointed Member'' is either an Appointed Market Maker 
or Appointed Order Flow Provider. See MRX Options 7, General 1.
    \5\ An ``Appointed Order Flow Provider'' is an Electronic Access 
Member who has been appointed by a Market Maker pursuant to Section 
3, Table 3.
    \6\ An ``Appointed Market Maker'' is a Market Maker who has been 
appointed by an Electronic Access Member pursuant to Section 3, 
Table 3.
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    The concept of an Appointed Member was established in 2016 \7\ and 
was intended to incentivize firms to direct their order flow to the 
Exchange to the benefit of all market participants. Today, all eligible 
volume from an Appointed Order Flow Provider is 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 certain instructions. Today, a Market Maker appoints an 
Electronic Access Member as its Appointed Order Flow Provider and an 
Electronic Access Member appoints a Market Maker as its Appointed 
Market Maker, for the purposes of pricing, by each sending an email. 
The corresponding emails are viewed as acceptance of the 
appointment.\8\ Today, an Appointed Market Maker is eligible to receive 
and aggregate volume credit from both their Affiliated Members \9\ and 
their Appointed Order Flow Provider. An Appointed Order Flow Provider 
does not receive volume credit from its Appointed Market Maker or the 
Appointed Market Maker's Affiliated Members in determining its 
applicable tiers.\10\
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    \7\ See Securities Exchange Act Release No. 77841 (May 20, 
2016), 81 FR 31986 (May 16, 2016) (SR-ISEMercury-2016-11). ISE 
Mercury was the prior name of MRX.
    \8\ The Exchange recognizes one such designation for each party. 
A party may make a designation not more than once every 6 months, 
which designation remains in effect until the Exchange receives an 
email from either party indicating that the appointment has been 
terminated.
    \9\ 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. See Options 7, Section 1.
    \10\ See Options 7, Section 3 within Table 3.
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    The Exchange proposes to replace the Appointed Member Program with 
an aggregation program offered today on ISE for an Affiliated Entity to 
permit the Exchange to administer both programs in the same fashion. 
Specifically, the Exchange proposes to adopt the term ``Affiliated 
Entity'' within Options 7, Section 1. An ``Affiliated Entity'' would be 
a relationship between an Appointed Market Maker and an Appointed OFP 
for purposes of qualifying for certain pricing specified in the Pricing 
Schedule. An Appointed Market Maker would be re-defined similar to ISE 
as a Market Maker who has been appointed by an OFP for purposes of 
qualifying as an Affiliated Entity. An ``Order Flow Provider'' or 
``OFP'' is proposed to be defined within Options 7, Section 1 as any 
Member, other than a Market Maker,\11\ that submits orders, as agent or 
principal, to the Exchange. Finally, an Appointed Order Flow Provider 
would be re-defined within Options 7, Section 1 as an OFP who has been 
appointed by a Market Maker for purposes of qualifying as an Affiliated 
Entity. The Exchange would remove the term ``Appointed Member'' in 
connection with eliminating the Appointed Member Program. As noted 
above, the Affiliated Entity program would be similar to ISE's 
program.\12\
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    \11\ Market Makers shall not be considered Appointed OFPs for 
the purpose of becoming an Affiliated Entity.
    \12\ A Member on ISE and a Member on MRX may affiliate with 
different Members on each market.
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    In order to become an Affiliated Entity, Market Makers and OFPs 
will be required to send an email to the Exchange to appoint their 
counterpart, at least 3 business days prior to the last day of the 
month to qualify for the next month.\13\ For example, with this 
proposal, market participants may submit emails \14\ to the Exchange to 
become Affiliated Entities to qualify for discounted pricing starting 
November 1, 2020, provided the emails are sent at least 3 business days 
prior to the first business day of November 2020. The Exchange will 
acknowledge receipt of the emails and specify the date the Affiliated 
Entity would qualify for applicable pricing, as specified in the 
Pricing Schedule. Each Affiliated Entity relationship will commence on 
the 1st of a month and may not be terminated prior to the end of any 
month. An Affiliated Entity relationship will terminate after a one (1) 
year period, unless either party terminates earlier in

[[Page 75066]]

writing by sending an email \15\ to the Exchange at least 3 business 
days prior to the last day of the month to terminate for the next 
month. Affiliated Entity relationships must be renewed annually. For 
example, if the start date of the Affiliated Entity relationship is 
November 1, 2020, the counterparties may determine to commence a new 
relationship as of November 1, 2021 by requiring each party to send a 
new email 3 business days prior to the end of November 2021. Affiliated 
Members may not qualify as a counterparty comprising an Affiliated 
Entity. Each Member may qualify for only one (1) Affiliated Entity 
relationship at any given time. As proposed, an Affiliated Entity shall 
be eligible to aggregate their volume for purposes of qualifying for 
certain pricing specified in the Pricing Schedule, as described below.
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    \13\ The Exchange shall issue an Options Trader Alert specifying 
the email address and details required to apply to become an 
Affiliated Entity.
    \14\ Emails shall be submitted to membership@nasdaq.com.
    \15\ Id.
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    As stated above, one difference between the Appointed Member 
Program and the Affiliated Entity Program is that, today, a MRX Member 
may aggregate volume both as an Affiliated Member and as an Appointed 
Member for purposes of achieving favorable pricing. With this proposal, 
a MRX Member may aggregate volume either as an Affiliated Member or as 
an Affiliated Entity, but may not aggregate under both programs 
combined during the same time period. Moreover, unlike the Appointed 
Member Program, with the Affiliated Entity Program, an Affiliated 
Member may not qualify as a counterparty comprising an Affiliated 
Entity.
Options 7, Section 3
    The note 2 Market Maker Taker Fee is the only fee within Options 7, 
Section 3 which is currently subject to the Appointed Member Program. 
Qualifying Tier Thresholds for the Market Maker Taker Fee are 
determined by Table 3 of Options 7, Section 3. The Exchange proposes to 
similarly permit Affiliated Entities to aggregate their volume to 
obtain the note 2 Market Maker Taker Fee within Options 7, Section 3. 
The note 2 Market Maker Taker Fee will remain the only fee within 
Options 7, Section 3 which would be subject to the Affiliated Entity 
Program.
    The Exchange proposes to amend note 2 within Options 3, Section 7 
to remove references to ``Appointed Member''. The Exchange is adding 
references within note 2 to ``Affiliated Entity.'' As proposed, note 2 
to Options 7, Section 3 would provide,

    A Taker Fee of $0.05 per contract applies instead when trading 
with Priority Customer orders entered by an Affiliated Member or 
Affiliated Entity if the Member has a Total Affiliated Member or 
Affiliated Entity Priority Customer ADV of 5,000 contracts or more. 
A Taker Fee of $0.00 per contract applies instead when trading with 
Priority Customer orders entered by an Affiliated Member or 
Affiliated Entity if the Member has a Total Affiliated Member or 
Affiliated Entity Priority Customer ADV of 50,000 contracts or more.

    As is the case today for an Affiliated Member, an Appointed Market 
Maker would be able to obtain the benefit of the reduced Market Maker 
Taker Fee if, in the aggregate, the Affiliated Entity meets the Average 
Daily Volume (``ADV'') requirements.
    Similarly, with respect to Table 3 within Options 7, Section 3, 
references to ``Appointed Member'' would be removed and ``Affiliated 
Entity'' would be added. Also any details concerning the Appointed 
Member Program within the notes below Table 3 within Options 7, Section 
3 would be removed. Specifically, the bullet points within Table 3 of 
Options 7, Section 3 that relate to the Appointed Member are being 
removed because the detail does not relate to the Affiliated Entity 
program. Finally, other bullets are being removed because they are 
redundant and not applicable. The Table 3, Options 7, Section 3 tiers, 
as proposed, would be as follows:

                       Qualifying Tier Thresholds
------------------------------------------------------------------------
                                            Total affiliated member or
                 Tiers                        affiliated entity ADV
------------------------------------------------------------------------
Tier 1.................................  executes 0.00%-0.7499% of
                                          Customer Total Consolidated
                                          Volume
Tier 2.................................  executes 0.75% or more of
                                          Customer Total Consolidated
                                          Volume
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    Finally, the Exchange proposes to capitalize the term ``Taker Fee'' 
within note 2 of Options 7, Section 3 and update a cross reference 
within Options 7, Section 3 within note 1 of Table 1 to Options 7, 
Section 5.E., as the Exchange is relocating the referenced text within 
this proposal as noted below.
    As noted above, with this proposed change, a MRX Member may 
aggregate either as an Affiliated Member or an Affiliated Entity during 
the same time period, but may not aggregate under both programs during 
the same time period for purposes of achieving the lower Market Maker 
Taker Fee in note 2.
    With this proposal, the Exchange proposes to continue to 
incentivize certain Members, who are not Affiliated Members, to enter 
into an Affiliated Entity relationship for the purpose of aggregating 
volume executed on the Exchange to qualify to reduce their Market Maker 
Taker Fees. By aggregating volume, the Affiliated Entity, that submits 
certain requisite volume, offers the Appointed Market Maker an 
opportunity to lower Taker Fees and encourages Market Makers to submit 
additional liquidity on MRX.
Options 7, Section 4
    Today, a Complex Order Market Maker fee of $0.00 per contract 
applies, instead of the $0.15 per contract Complex Order fee, when the 
Market Maker trades against Priority Customer orders that originate 
from an Affiliated Member or an Appointed Member. MRX proposes to 
replace the one reference to ``Appointed Member'' within note 2 of 
Options 7, Section 4 with ``Affiliated Entity.''
    With the proposed change, as is the case under the current pricing, 
a MRX Member may aggregate either as an Affiliated Member or an 
Affiliated Entity during the same time period, but may not aggregate 
under both programs during the same time period for purposes of not 
paying a Complex Order Market Maker fee. With this proposal, the 
Exchange proposes to continue to incentivize certain Members, who are 
not Affiliated Members, to enter into an Affiliated Entity relationship 
for the purpose of aggregating volume executed on the Exchange to 
qualify to reduce their Complex Order Market Maker fee from $0.15 to 
$0.00 per contract. By aggregating volume, the Affiliated Entity, who 
submits certain requisite volume, offers the Appointed Market Maker an 
opportunity to not pay Complex Order Market Maker fees and encourages 
Market Makers to submit additional liquidity on MRX.
    Finally, the Exchange proposes to update a cross reference to 
Options 7, Section 5.E. within Options 7, Section 4, as the Exchange is 
relocating that related text within this proposal as noted below.
Options 7, Section 5
    The Exchange proposes to amend Options 7, Section 5.C., Options 
Regulatory Fee, to remove the date of the last ORF change because it is 
a past date that is no longer relevant.
    The Exchange proposes to relocate Options 7, Section 5.E., PIM 
Pricing for Regular and Complex Orders, to new Options 7, Section 3.A. 
in order that PIM pricing appear with other transactional pricing.
Options 7, Section 8
    The Exchange proposes to relocate Options 7, Section 8.E., Exchange

[[Page 75067]]

Testing Facilities, to the end of Options 7, Section 7, Market Data. 
The Exchange proposes to delete Options 7, Section 8, Connectivity 
Fees, as the remainder of the sections are reserved.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\16\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\17\ 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.
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    \16\ 15 U.S.C. 78 f(b).
    \17\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposed changes to its Pricing Schedule are 
reasonable in several respects. As a threshold matter, the Exchange is 
subject to significant competitive forces in the market for options 
securities transaction services that constrain its pricing 
determinations in that market. The fact that this market is competitive 
has long been recognized by the courts. In NetCoalition v. Securities 
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one 
disputes that competition for order flow is `fierce.' . . . As the SEC 
explained, `[i]n the U.S. national market system, buyers and sellers of 
securities, and the broker-dealers that act as their order-routing 
agents, have a wide range of choices of where to route orders for 
execution'; [and] `no exchange can afford to take its market share 
percentages for granted' because `no exchange possesses a monopoly, 
regulatory or otherwise, in the execution of order flow from broker 
dealers'. . . .'' \18\
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    \18\ NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \19\
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    \19\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
options security transaction services. The Exchange is only one of 
sixteen options exchanges to which market participants may direct their 
order flow. Within this environment, market participants can freely and 
often do shift their order flow among the Exchange and competing venues 
in response to changes in their respective pricing schedules. As such, 
the proposal represents a reasonable attempt by the Exchange to 
increase its liquidity and market share relative to its competitors.
Options 7, Section 1
    The Exchange's proposal to replace the Appointed Member Program 
with an Affiliated Entity program, similar to ISE, is reasonable 
because the Exchange proposes to continue to incentivize certain 
Members, who are not Affiliated Members, to enter into an Affiliated 
Entity relationship for the purpose of aggregating volume executed on 
the Exchange to qualify for certain lower Market Maker fees. By 
aggregating volume for purposes of Table 3 of Options 7, Section 3, the 
Appointed Market Maker, who submits certain requisite volume along with 
an Appointed OFP, will continue to benefit from lower Market Maker 
fees. This proposal will harmonize MRX's program with ISE's program. 
The Exchange notes that a Member that registers for an Affiliated 
Entity will not be able to aggregate as an Affiliated Member.\20\ While 
a MRX Member may not utilize both the Affiliated Member and the 
Affiliated Entity program to aggregate volume for purposes of achieving 
lower Market Maker fees, the Exchange believes that continuing to 
permit aggregation individually under each program, Affiliated Member 
and the Affiliated Entity program, will encourage Market Makers to 
continue to submit additional liquidity on MRX if they chose to enter 
into this relationship.
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    \20\ As proposed, Affiliated Members may not qualify as a 
counterparty comprising an Affiliated Entity.
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    The Exchange's proposal to replace the Appointed Member Program 
with an Affiliated Entity program, similar to ISE, is equitable and not 
unfairly discriminatory as all market participants may enter into an 
Affiliated Entity relationship, provided they have not elected to 
aggregate as an Affiliated Member. The Exchange believes that market 
participants that, today, utilize the Appointed Member Program would be 
able to utilize the Affiliated Entity program to continue to aggregate 
volume for purposes of obtaining lower fees. As proposed, Affiliated 
Members, who are eligible to aggregate volume today, are not eligible 
to also enter into an Affiliated Entity relationship. The Exchange's 
proposal to exclude Affiliated Members from qualifying as an Affiliated 
Entity is equitable and not unfairly discriminatory because, today, 
Affiliated Members may aggregate volume for purposes of lowering fees 
on MRX. Also, as proposed no MRX Member may utilize both the Affiliated 
Member and the Affiliated Entity program to aggregate volume for 
purposes of achieving lower Market Maker Taker Fees.
    The Exchange's proposal to exclude Affiliated Members from 
qualifying as an Affiliated Entity is reasonable, equitable and not 
unfairly discriminatory because, today, Affiliated Members may 
aggregate volume for purposes of lowering fees on MRX. Also, the 
Exchange will apply all qualifications in a uniform manner when 
approving Affiliated Entities. While a MRX Member may not utilize both 
the Affiliated Member and the Affiliated Entity program to aggregate 
volume for purposes of achieving lower Market Maker fees, the Exchange 
believes that continuing to permit aggregation individually under each 
program, Affiliated Member and the Affiliated Entity program, will 
encourage Market Makers to continue to submit additional liquidity on 
MRX if they chose to enter into this relationship.
Options 7, Section 3
    The Exchange's proposal to amend note 2 within Options 7, Section 3 
to remove references to ``Appointed Member'' and add references within 
note 2 to ``Affiliated Entity'' is reasonable. As is the case today for 
an Affiliated Member, an Appointed Market Maker would be able to obtain 
the benefit of the reduced Market Maker Taker Fee \21\ if in the 
aggregate the

[[Page 75068]]

Affiliated Entity meets the Average Daily Volume (``ADV'') 
requirements. The Exchange believes the opportunity to aggregate volume 
for purposes of lowering the Market Maker Taker Fee will encourages 
Market Makers to continue to submit additional liquidity on MRX if they 
chose to enter into this relationship. While a MRX Member may not 
utilize both the Affiliated Member and the Affiliated Entity program to 
aggregate volume for purposes of achieving lower Market Maker fees, the 
Exchange believes that continuing to permit aggregation individually 
under each program, Affiliated Member and the Affiliated Entity 
program, will encourage Market Makers to continue to submit additional 
liquidity on MRX if they chose to enter into this relationship.
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    \21\ As proposed, a Market Maker Taker Fee of $0.05 per contract 
applies instead when trading with Priority Customer orders entered 
by an Affiliated Member or Affiliated Entity if the Member has a 
Total Affiliated Member or Affiliated Entity Priority Customer ADV 
of 5,000 contracts or more. A Market Maker Taker Fee of $0.00 per 
contract applies instead when trading with Priority Customer orders 
entered by an Affiliated Member or Affiliated Entity if the Member 
has a Total Affiliated Member or Affiliated Entity Priority Customer 
ADV of 50,000 contracts or more.
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    The Exchange's proposal to amend note 2 within Options 7, Section 3 
to remove references to ``Appointed Member'' and add references within 
note 2 to ``Affiliated Entity'' is equitable and not unfairly 
discriminatory as all market participants may enter into an Affiliated 
Entity relationship, provided they have not elected to aggregate as an 
Affiliated Member. The Exchange believes that market participants that, 
today, utilize the Appointed Member Program would be able to utilize 
the Affiliated Entity program to continue to aggregate volume for 
purposes of obtaining lower Market Maker fees. As proposed, Affiliated 
Members, who are eligible to aggregate volume today, are not eligible 
to also enter into an Affiliated Entity relationship. 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. Permitting Members to aggregate 
volume for purposes of qualifying the Appointed Market Maker for 
reduced Market Maker Taker Fees would continue to encourage the 
counterparties that comprise the Affiliated Entities to incentivize 
each other to attract and seek to execute more Priority Customer volume 
on MRX.
Options 7, Section 4
    Amending Options 7, Section 4, regarding Complex Orders, within 
note 2 to remove a reference to ``Appointed Member'' and replace it 
with a reference to ``Affiliated Entity'' is reasonable. As is the case 
today for an Appointed Member, an Affiliated Entity would aggregate its 
volume to permit an Appointed Market Maker to pay no Complex Order 
Market Maker fee \22\ when the Market Maker trades against Priority 
Customer orders that originate from an Affiliated Member or an 
Affiliated Entity. With the proposed change, as is the case under the 
current pricing, a MRX Member may aggregate either as an Affiliated 
Member or an Affiliated Entity during the same time period, but may not 
aggregate under both programs during the same time period for purposes 
of not paying a Complex Order Market Maker fee.
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    \22\ With this proposed change a Complex Order Market Maker fee 
of $0.00 per contract applies instead of the above-referenced $0.15 
per contract Complex Order fee, when the Market Maker trades against 
Priority Customer orders that originate from an Affiliated Member or 
an Affiliated Entity.
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    Amending Options 7, Section 4, regarding Complex Orders, within 
note 2 to remove a reference to ``Appointed Member'' and replace it 
with a reference to ``Affiliated Entity'' is equitable and not unfairly 
discriminatory as all market participants may enter into an Affiliated 
Entity relationship, provided they have not elected to aggregate as an 
Affiliated Member. The Exchange believes that market participants that, 
today, utilize the Appointed Member Program would be able to utilize 
the Affiliated Entity program to continue to aggregate volume for 
purposes of obtaining lower fees. As proposed, Affiliated Members, who 
are eligible to aggregate volume today, are not eligible to also enter 
into an Affiliated Entity relationship. 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. Permitting Members to aggregate 
volume from an Affiliated Entity would continue to encourage the 
counterparties that comprise the Affiliated Entities to incentivize 
each other to attract and seek to execute more Priority Customer volume 
on MRX.
Options 7, Section 5
    The Exchange's proposal to amend Options 7, Section 5.C., Options 
Regulatory Fee, to remove the date of the last ORF change is 
reasonable, equitable and not unfairly discriminatory as the date is a 
past date that is not relevant and this non-substantive change does not 
impact pricing.
    The Exchange's proposal to relocate Options 7, Section 5.E., PIM 
Pricing for Regular and Complex Orders, to new Options 7, Section 3.A. 
is reasonable, equitable and not unfairly discriminatory as this non-
substantive change does not impact pricing.
Options 7, Section 8
    The Exchange's proposal to relocate Options 7, Section 8.E., 
Exchange Testing Facilities, to the end of Options 7, Section 7, Market 
Data, is reasonable, equitable and not unfairly discriminatory as this 
non-substantive change does not impact pricing. The deletion of Options 
7, Section 8, Connectivity Fees, is reasonable, equitable and not 
unfairly discriminatory as this non-substantive change does not impact 
pricing.

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.
Inter-Market Competition
    The proposal does not impose an undue burden on inter-market 
competition. The Exchange believes its proposal remains competitive 
with other options markets and will offer market participants another 
choice of where to transact options. 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, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges that have been exempted from compliance with the statutory 
standards applicable to exchanges. Because competitors are free to 
modify their own fees in response, and because market participants may 
readily adjust their order routing practices, the Exchange believes 
that the degree to which fee changes in this market may impose any 
burden on competition is extremely limited.
Intra-Market Competition
    The proposed amendments do not impose an undue burden on intra-
market competition.
Options 7, Section 1
    The Exchange's proposal to replace the Appointed Member Program 
with an Affiliated Entity program, similar to ISE, does not impose an 
undue burden on competition as all market participants

[[Page 75069]]

may enter into an Affiliated Entity relationship, provided they have 
not elected to aggregate as an Affiliated Member. The Exchange believes 
that market participants that, today, utilize the Appointed Member 
Program would be able to utilize the Affiliated Entity program to 
continue to aggregate volume for purposes of obtaining lower fees. As 
proposed, Affiliated Members, who are eligible to aggregate volume 
today, are not eligible to also enter into an Affiliated Entity 
relationship. The Exchange's proposal to exclude Affiliated Members 
from qualifying as an Affiliated Entity is equitable and not unfairly 
discriminatory because, today, Affiliated Members may aggregate volume 
for purposes of lowering fees on MRX. Also, as proposed no MRX Member 
may utilize both the Affiliated Member and the Affiliated Entity 
program to aggregate volume for purposes of achieving lower Market 
Maker Taker Fees.
    The Exchange's proposal to exclude Affiliated Members from 
qualifying as an Affiliated Entity does not impose an undue burden on 
competition because, today, Affiliated Members may aggregate volume for 
purposes of lowering fees on MRX. Also, the Exchange will apply all 
qualifications in a uniform manner when approving Affiliated Entities. 
While a MRX Member may not utilize both the Affiliated Member and the 
Affiliated Entity program to aggregate volume for purposes of achieving 
lower Market Maker fees, the Exchange believes that continuing to 
permit aggregation individually under each program, Affiliated Member 
and the Affiliated Entity program, will encourage Market Makers to 
continue to submit additional liquidity on MRX if they chose to enter 
into this relationship.
Options 7, Section 3
    The Exchange's proposal to amend note 2 within Options 7, Section 3 
to remove references to ``Appointed Member'' and add references within 
note 2 to ``Affiliated Entity'' does not impose an undue burden on 
competition as all market participants may enter into an Affiliated 
Entity relationship, provided they have not elected to aggregate as an 
Affiliated Member. The Exchange believes that market participants that, 
today, utilize the Appointed Member Program would be able to utilize 
the Affiliated Entity program to continue to aggregate volume for 
purposes of obtaining lower Market Maker fees. As proposed, Affiliated 
Members, who are eligible to aggregate volume today, are not eligible 
to also enter into an Affiliated Entity relationship. 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. Permitting Members to aggregate 
volume for purposes of qualifying the Appointed Market Maker for 
reduced Market Maker Taker Fees would continue to encourage the 
counterparties that comprise the Affiliated Entities to incentivize 
each other to attract and seek to execute more Priority Customer volume 
on MRX.
Options 7, Section 4
    Amending Options 7, Section 4, regarding Complex Orders, within 
note 2 to remove a reference to ``Appointed Member'' and replace it 
with a reference to ``Affiliated Entity'' does not impose an undue 
burden on competition as all market participants may enter into an 
Affiliated Entity relationship, provided they have not elected to 
aggregate as an Affiliated Member. The Exchange believes that market 
participants that, today, utilize the Appointed Member Program would be 
able to utilize the Affiliated Entity program to continue to aggregate 
volume for purposes of obtaining lower fees. As proposed, Affiliated 
Members, who are eligible to aggregate volume today, are not eligible 
to also enter into an Affiliated Entity relationship. 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. Permitting Members to aggregate 
volume from an Affiliated Entity would continue to encourage the 
counterparties that comprise the Affiliated Entities to incentivize 
each other to attract and seek to execute more Priority Customer volume 
on MRX.
Options 7, Section 5
    The Exchange's proposal to amend Options 7, Section 5.C., Options 
Regulatory Fee, to remove the date of the last ORF change does not 
impose an undue burden on competition as this non-substantive change 
does not impact pricing.
    The Exchange's proposal to relocate Options 7, Section 5.E., PIM 
Pricing for Regular and Complex Orders, to new Options 7, Section 3.A. 
does not impose an undue burden on competition as this non-substantive 
change does not impact pricing.
Options 7, Section 8
    The Exchange's proposal to relocate Options 7, Section 8.E., 
Exchange Testing Facilities, to the end of Options 7, Section 7, Market 
Data, does not impose an undue burden on competition as this non-
substantive change does not impact pricing. The deletion of Options 7, 
Section 8, Connectivity Fees, does not impose an undue burden on 
competition as this non-substantive change does not impact pricing.

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,\23\ and Rule 19b-4(f)(2) \24\ 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: (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.
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    \23\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \24\ 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-MRX-2020-21 on the subject line.

Paper Comments

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


[[Page 75070]]


All submissions should refer to File Number SR-MRX-2020-21. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet 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-2020-21 and should be submitted on 
or before December 15, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25898 Filed 11-23-20; 8:45 am]
BILLING CODE 8011-01-P


