[Federal Register Volume 85, Number 243 (Thursday, December 17, 2020)]
[Notices]
[Pages 81996-81999]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27719]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90638; File No. SR-MIAX-2020-37]


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

December 11, 2020.
    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 December 1, 2020, 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 (``Fee Schedule'').
    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 (i) make a minor, corrective edit and 
clarifying change to one of the footnotes in Section 1)b)i) of the Fee 
Schedule; and (ii) amend the exchange groupings of options exchanges 
within the routing fee table in Section 1)c) of the Fee Schedule.
Fee Schedule Cleanup
    First, the Exchange proposes to amend footnote ``!'' in Section 
1)b)i) of the Fee Schedule to make a minor, corrective edit and 
clarifying change. Footnote ``!'' currently provides as follows: ``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.'' Pursuant to Exchange 
Rule 518, Interpretation and Policy .07(a), 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.\3\ 
Further, a ``SPIKES Combo Order'' is an order to purchase or sell one 
or more SPIKES option series and the offsetting number of SPIKES 
Combinations defined by the delta.\4\ The Exchange proposes to amend 
footnote ``!'' to delete the word ``Combination'' in the phrase 
``SPIKES Combination Order'' and replace it with the word ``Combo.'' 
The purpose of this proposed change is to provide the correct name of 
the type of order in footnote ``!''.
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    \3\ See Exchange Rule 518, Interpretation and Policy .07(a)(1).
    \4\ See Exchange Rule 518, Interpretation and Policy .07(a)(3).

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[[Page 81997]]

Update Group of Certain Options Exchanges
    Next, the Exchange proposes to amend the exchange groupings of 
options exchanges within the routing fee table in Section 1)c) of the 
Fee Schedule to adjust certain groupings of options exchanges.
    Currently, the Exchange assesses routing fees based upon (i) the 
origin type of the order, (ii) whether or not it is an order for 
standard option classes in the Penny Interval Program \5\ (``Penny 
classes'') or an order for standard option classes which are not in the 
Penny Interval Program (``Non-Penny classes'') (or other explicitly 
identified classes), and (iii) to which away market it is being routed. 
This assessment practice is identical to the routing fees assessment 
practice currently utilized by the Exchange's affiliates, MIAX PEARL, 
LLC (``MIAX PEARL'') and MIAX Emerald, LLC (``MIAX Emerald''). This is 
also similar to the methodologies utilized by other competing options 
exchanges, such as the Cboe BZX Exchange, Inc. (``Cboe BZX''), in 
assessing routing fees. Cboe BZX has exchange groupings in its fee 
schedule, similar to those of the Exchange, whereby several exchanges 
are grouped into the same category, dependent on the order's origin 
type and whether it is a Penny or Non-Penny class.\6\
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    \5\ See Securities Exchange Act Release No. 88988 (June 2, 
2020), 85 FR 35153 (June 8, 2020) (SR-MIAX-2020-13) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Exchange Rule 404, Series of Option Contracts Open for 
Trading, Exchange Rule 510, Minimum Price Variations and Minimum 
Trading Increments, and Exchange Rule 516, Order Types Defined, To 
Conform the Rules to Section 3.1 of the Plan for the Purpose of 
Developing and Implementing Procedures Designed To Facilitate the 
Listing and Trading of Standardized Options).
    \6\ See Cboe BZX Fee Schedule under ``Fee Codes and Associated 
Fees.''
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    As a result of conducting a periodic review of the current 
transaction fees and rebates charged by away markets, the Exchange has 
determined to amend the exchange groupings of options exchanges within 
the routing fee table to better reflect the associated costs of routing 
customer orders to those options exchanges for execution. In 
particular, the Exchange proposes to amend the seventh ``Routed, Public 
Customer that is not a Priority Customer, Non-Penny Program'' exchange 
grouping to move Nasdaq MRX from the seventh exchange grouping into the 
eighth ``Routed, Public Customer that is not a Priority Customer, Non-
Penny Program'' exchange grouping. The impact of this proposed change 
will be that the routing fee for Public Customer orders that are not 
Priority Customer orders in the Penny Program, that are routed to 
Nasdaq MRX, LLC (``Nasdaq MRX''), will increase from $1.15 to $1.25. 
The Exchange notes that no options exchanges were removed from the 
routing fee table entirely, with the only change being the change in 
categorization for Nasdaq MRX. The purpose of the proposed rule change 
is to adjust the routing fee for certain orders routed to Nasdaq MRX to 
reflect the associated costs for that routed execution.
    Accordingly, with the proposed change, the routing fee table will 
be as follows:

------------------------------------------------------------------------
                         Description                              Fees
------------------------------------------------------------------------
Routed, Priority Customer, Penny Program, to: NYSE American,       $0.15
 BOX, Cboe, Cboe EDGX Options, Nasdaq MRX, Nasdaq PHLX
 (except SPY), Nasdaq BX Options.............................
Routed, Priority Customer, Penny Program, to: NYSE Arca             0.65
 Options, Cboe BZX Options, Cboe C2, Nasdaq GEMX, Nasdaq ISE,
 NOM, Nasdaq PHLX (SPY only), MIAX Emerald, MIAX PEARL.......
Routed, Priority Customer, Non-Penny Program, to: NYSE              0.15
 American, BOX, Cboe, Cboe EDGX Options, Nasdaq ISE, Nasdaq
 MRX, Nasdaq PHLX, Nasdaq BX Options.........................
Routed, Priority Customer, Non-Penny Program, to: NYSE Arca         1.00
 Options, Cboe BZX Options, Cboe C2, MIAX PEARL, MIAX
 Emerald, Nasdaq GEMX, NOM...................................
Routed, Public Customer that is not a Priority Customer,            0.65
 Penny Program, to: NYSE American, NYSE Arca Options, Cboe
 BZX Options, BOX, Cboe, Cboe C2, Cboe EDGX Options, Nasdaq
 GEMX, Nasdaq ISE, Nasdaq MRX, MIAX PEARL, MIAX Emerald, NOM,
 Nasdaq PHLX, Nasdaq BX Options..............................
Routed, Public Customer that is not a Priority Customer, Non-       1.00
 Penny Program, to: NYSE American, Cboe, Nasdaq PHLX, Nasdaq
 ISE, Cboe EDGX Options......................................
Routed, Public Customer that is not a Priority Customer, Non-       1.15
 Penny Program, to: Cboe C2, BOX, Nasdaq BX Options, NOM,
 MIAX PEARL, MIAX Emerald....................................
Routed, Public Customer that is not a Priority Customer, Non-       1.25
 Penny Program, to: Cboe BZX Options, NYSE Arca Options,
 Nasdaq GEMX, Nasdaq MRX.....................................
------------------------------------------------------------------------

    In determining to amend its Routing Fees, the Exchange took into 
account transaction fees and rebates assessed by the away markets to 
which the Exchange routes orders, as well as the Exchange's clearing 
costs,\7\ administrative, regulatory, and technical costs associated 
with routing orders to an away market. The Exchange uses unaffiliated 
routing brokers to route orders to the away markets; the costs 
associated with the use of these services are included in the routing 
fees specified in the Fee Schedule. This routing fees structure is not 
only similar to the Exchange's affiliates, MIAX PEARL and MIAX Emerald, 
but is also comparable to the structures in place at other competing 
options exchanges, such as Cboe BZX.\8\ The Exchange's routing fee 
structure approximates the Exchange's costs associated with routing 
orders to away markets. The per-contract transaction fee amount 
associated with each grouping closely approximates the Exchange's all-
in cost (plus an additional, non-material amount) to execute that 
corresponding contract at that corresponding exchange. The Exchange 
notes that in determining whether to adjust certain groupings of 
options exchanges in the routing fee table, the Exchange considered the 
transaction fees and rebates assessed by away markets, and determined 
to amend the grouping of exchanges that assess transaction fees for 
routed orders within a similar range. This same logic and structure 
applies to all of the groupings in the routing fees table. By utilizing 
the same structure that is utilized by the Exchange's affiliates, MIAX 
PEARL and

[[Page 81998]]

MIAX Emerald, the Exchange's Members \9\ will be assessed routing fees 
in a similar manner. The Exchange believes that this structure will 
minimize any confusion as to the method of assessing routing fees 
between the three exchanges. The Exchange notes that its affiliates, 
MIAX PEARL and MIAX Emerald, will file to make the same proposed 
routing fee change for Nasdaq MRX.
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    \7\ The OCC amended its clearing fee from $0.01 per contract 
side to $0.02 per contract side. See Securities Exchange Act Release 
No. 71769 (March 21, 2014), 79 FR 17214 (March 27, 2014) (SR-OCC-
2014-05).
    \8\ See supra note 6. The Cboe BZX fee schedule has exchange 
groupings, whereby several exchanges are grouped into the same 
category, dependent on the order's Origin type and whether it is a 
Penny or Non-Penny class. For example, Cboe BZX fee code RR covers 
routed customer orders in Non-Penny classes to NYSE Arca, Cboe C2, 
Nasdaq ISE, Nasdaq Gemini, MIAX Emerald, MIAX PEARL, or NOM, with a 
single fee of $1.25 per contract. Id.
    \9\ 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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2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule 
is consistent with Section 6(b) of the Act \10\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \11\ in 
particular, in that it is an equitable allocation of reasonable dues, 
fees, and other charges among its 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 \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 customers, issuers, brokers and dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed change to make a minor, 
corrective edit and clarifying change to footnote ``!'' in Section 
1)b)i) of the Fee Schedule promotes just and equitable principles of 
trade and removes impediments to and perfects the mechanism of a free 
and open market and a national market system because the proposed 
change will provide greater clarity to Members and the public regarding 
the Exchange's Fee Schedule. The Exchange believes that it is in the 
public interest for the Fee Schedule to be accurate and concise so as 
to eliminate the potential for confusion.
    The Exchange believes the proposed change to the exchange groupings 
of options exchanges within the routing fee table furthers the 
objectives of Section 6(b)(4) of the Act and is reasonable, equitable 
and not unfairly discriminatory because the proposed change will 
continue to apply in the same manner to all Members that are subject to 
routing fees. The Exchange believes the proposed change to the routing 
fee table exchange groupings furthers the objectives of Section 6(b)(5) 
of the Act and is designed to promote just and equitable principles of 
trade and is not unfairly discriminatory because the proposed change 
seeks to recoup costs that are incurred by the Exchange when routing 
customer orders to away markets on behalf of Members and does so in the 
same manner to all Members that are subject to routing fees. The costs 
to the Exchange to route orders to away markets for execution primarily 
includes transaction fees and rebates assessed by the away markets to 
which the Exchange routes orders, in addition to the Exchange's 
clearing costs, administrative, regulatory and technical costs. The 
Exchange believes that the proposed re-categorization of certain 
exchange groupings would enable the Exchange to recover the costs it 
incurs to route orders to Nasdaq MRX. The per-contract transaction fee 
amount associated with each grouping approximates the Exchange's all-in 
cost (plus an additional, non-material amount) to execute the 
corresponding contract at the corresponding 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's proposal to make 
a minor, corrective edit and clarifying change to footnote ``!'' in 
Section 1)b)i) of the Fee Schedule is not a competitive change but 
rather is designed to remedy a minor non-substantive issue and provide 
added clarity to the Fee Schedule in order to avoid potential confusion 
on the part of market participants. In addition, the Exchange does not 
believe the proposal will impose any burden on inter-market competition 
as the proposal does not address any competitive issues and is intended 
to protect investors by providing further transparency regarding the 
Exchange's Fee Schedule.
    The Exchange believes its proposed re-categorization of certain 
exchange groupings is intended to enable the Exchange to recover the 
costs it incurs to route orders to away markets, particularly Nasdaq 
MRX. The Exchange does not believe that this proposal imposes any 
unnecessary burden on competition because it seeks to recoup costs 
incurred by the Exchange when routing orders to away markets on behalf 
of Members and other exchanges have similar routing fee structures.\13\
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    \13\ See supra note 6.
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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,\14\ and Rule 19b-4(f)(2) \15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 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-2020-37 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-2020-37. 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

[[Page 81999]]

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-2020-37, and should be 
submitted on or before January 7, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27719 Filed 12-16-20; 8:45 am]
BILLING CODE 8011-01-P


