[Federal Register Volume 86, Number 199 (Tuesday, October 19, 2021)]
[Notices]
[Pages 57869-57874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22689]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93306; File No. SR-MIAX-2021-42]


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

 October 13, 2021.
    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 September 30, 2021, Miami International 
Securities Exchange LLC (``MIAX'' 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'').
    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

[[Page 57870]]

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 modify (i) the 
MIAX Price Improvement Mechanism (``PRIME'') Fees table and 
accompanying notes; and (ii) the MIAX Complex Price Improvement 
Mechanism (``cPRIME'') Fees table. The Exchange proposes to implement 
the fee changes effective October 1, 2021.
Background
    PRIME is a process by which a Member \3\ may electronically submit 
for execution an order it represents as agent (an ``Agency Order'') 
against principal interest and/or solicited interest. The Member that 
submits the Agency Order (``Initiating Member'') agrees to guarantee 
the execution of the Agency Order by submitting a contra-side order 
representing principal interest or solicited interest (``Contra-Side 
Order''). When the Exchange receives a properly designated Agency Order 
for Auction processing, a request for response (``RFR'') detailing the 
option, side, size and initiating price is broadcasted to MIAX 
participants up to an optional designated limit price. Members may 
submit responses to the RFR, which can be either an Auction or Cancel 
(``AOC'') order \4\ or an AOC eQuote.\5\ The PRIME mechanism is used 
for orders on the Exchange's Simple Order Book.\6\ The Exchange notes 
that for Complex Orders \7\ on the Strategy Book,\8\ the Exchange's 
cPRIME \9\ mechanism operates in the same manner for processing and 
execution of cPRIME Orders that is used for PRIME Orders on the Simple 
Order Book.
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    \3\ 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.
    \4\ An Auction-or-Cancel or ``AOC'' order is a limit order used 
to provide liquidity during a specific Exchange process (such as the 
Opening Imbalance process described in Rule 503) with a time in 
force that corresponds with that event. AOC orders are not displayed 
to any market participant, are not included in the MBBO and 
therefore are not eligible for trading outside of the event, may not 
be routed, and may not trade at a price inferior to the away 
markets. See Exchange Rule 516(b)(4).
    \5\ AOC eQuote An Auction or Cancel or ``AOC'' eQuote is a quote 
submitted by a Market Maker to provide liquidity in a specific 
Exchange process (such as the Opening Imbalance Process described in 
Rule 503) with a time in force that corresponds with the duration of 
that event and will automatically expire at the end of that event. 
AOC eQuotes are not displayed to any market participant, are not 
included in the MBBO and therefore are not eligible for trading 
outside of the event. An AOC eQuote does not automatically cancel or 
replace the Market Maker's previous Standard quote or eQuote. See 
Exchange Rule 517(a)(2)(ii).
    \6\ The ``Simple Order Book'' is the Exchange's regular 
electronic book of orders and quotes. See Exchange Rule 518(a)(15).
    \7\ A ``complex order'' is any order involving the concurrent 
purchase and/or sale of two or more different options in the same 
underlying security (the ``legs'' or ``components'' of the complex 
order), for the same account, in a ratio that is equal to or greater 
than one-to-three (.333) and less than or equal to three-to-one 
(3.00) and for the purposes of executing a particular investment 
strategy. Mini-options may only be part of a complex order that 
includes other mini-options. Only those complex orders in the 
classes designated by the Exchange and communicated to Members via 
Regulatory Circular with no more than the applicable number of legs, 
as determined by the Exchange on a class-by-class basis and 
communicated to Members via Regulatory Circular, are eligible for 
processing. See Exchange Rule 518(a)(5).
    \8\ The ``Strategy Book'' is the Exchange's electronic book of 
complex orders and complex quotes. See Exchange Rule 518(a)(17).
    \9\ ``cPRIME'' is the process by which a Member may 
electronically submit a ``cPRIME Order'' (as defined in Rule 
518(b)(7)) it represents as agent (a ``cPRIME Agency Order'') 
against principal or solicited interest for execution (a ``cPRIME 
Auction''), subject to the restrictions set forth in Exchange Rule 
515A, Interpretation and Policy .12. See Exchange Rule 515A.
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    Exchange Rule 518(b)(7) defines a cPRIME Order as a type of complex 
order that is submitted for participation in a cPRIME Auction and 
trading of cPRIME Orders is governed by Rule 515A, Interpretation and 
Policies.12.\10\ cPRIME Orders are processed and executed in the 
Exchange's PRIME [sic] mechanism, the same mechanism that the Exchange 
uses to process and execute simple PRIME orders, pursuant to Exchange 
Rule 515A.\11\ A cPRIME Auction is the price-improvement mechanism of 
the Exchange's System pursuant to which an Initiating Member 
electronically submits a complex Agency Order into a cPRIME Auction. 
The Initiating Member, in submitting an Agency Order, must be willing 
to either (i) cross the Agency Order at a single price against 
principal or solicited interest, or (ii) automatically match against 
principal or solicited interest, the price and size of a RFR that is 
broadcast to MIAX participants up to an optional designated limit 
price. Such responses are defined as cPRIME AOC Responses or cPRIME 
eQuotes. The PRIME mechanism is used for orders on the Exchange's 
Simple Order Book. The cPRIME mechanism is used for Complex Orders on 
the Exchange's Strategy Book, with the cPRIME mechanism operating in 
the same manner for processing and execution of cPRIME Orders that is 
used for PRIME Orders on the Simple Order Book.
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    \10\ See Securities Exchange Act Release No. 81131 (July 12, 
2017), 82 FR 32900 (July 18, 2017) (SR-MIAX-2017-19) (Order Granting 
Approval of a Proposed Rule Change to Amend MIAX Options Rules 515, 
Execution of Orders and Quotes; 515A, MIAX Price Improvement 
Mechanism (``PRIME'') and PRIME Solicitation Mechanism; and 518, 
Complex Orders).
    \11\ Id.
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Responder to PRIME Auction Fee
    The Exchange proposes to amend the Fee Schedule to modify the 
transaction fees for Members that participate in the PRIME Auction. 
Specifically, the Exchange proposes to amend the Responder to PRIME 
Auction Fee, Per Contract Fee for Non-Penny Classes, in the PRIME Fees 
table. Currently, the Exchange charges a fee of $0.99 for all Origins 
(Priority Customer,\12\ Public Customer \13\ that is not a Priority 
Customer, MIAX Market Maker,\14\ Non-MIAX Market Maker, Non-Member 
Broker-Dealer, and Firm). The Exchange now proposes to increase the 
Responder fee for Non-Penny Classes from $0.99 to $1.10 per contract 
for all Origins in the PRIME Fees table.
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    \12\ The term ``Priority Customer'' means a person or entity 
that (i) is not a broker or dealer in securities, and (ii) does not 
place more than 290 orders in listed options per day on average 
during a calendar month for its own beneficial account(s). See 
Exchange Rule 100.
    \13\ The term ``Public Customer'' means a person that is not a 
broker or dealer in securities. See Exchange Rule 100.
    \14\ The term ``Market Makers'' refers to ``Lead Market 
Makers'', ``Primary Lead Market Makers'' and ``Registered Market 
Makers'' collectively. See Exchange Rule 100.
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    The purpose of adjusting the per contract Responder fee for Non-
Penny Classes in the PRIME Fees table for all Origins is for business 
and competitive reasons. In order to attract order flow the Exchange 
initially set its PRIME rebates and fees so that they were meaningfully 
higher/lower than other options exchanges that provide a comparable 
price improvement mechanism. The Exchange now believes that it is 
appropriate to further adjust these fees so that they are more in line 
with other exchanges,\15\ but remain competitive such that it should 
enable the Exchange to continue to attract order

[[Page 57871]]

flow to PRIME Auctions and to also maintain market share.
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    \15\ The Exchange notes that BOX Options has a $1.15 responder 
fee in Non-Penny classes. See BOX Options Fee Schedule as of 
September 1, 2021, Section I. Electronic Transaction Fees, B. PIP 
and COPIP Transactions at https://boxoptions.com/regulatory/fee-schedule/. The Exchange also notes that Nasdaq MRX has a responder 
fee of $1.10 in Non-Penny classes. See Nasdaq MRX Options 7 Pricing 
Schedule, Section 3. Regular Order Fees and Rebates, A. PIM Pricing 
for Regular and Complex Orders at https://listingcenter.nasdaq.com/rulebook/mrx/rules/mrx-options-7.
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Priority Customer PRIME Break-Up Credit
    The Exchange proposes to amend the Fee Schedule to modify the PRIME 
Break-up Credit per contract credit for Non-Penny Classes for the 
Priority Customer Origin in PRIME. Currently, the Exchange provides 
Priority Customers a PRIME break-up credit of $0.60 per contract for 
Non-Penny Classes in a PRIME Auction. The Exchange now proposes to 
adopt an alternative Priority Customer PRIME break-up credit of $0.69, 
instead of $0.60, per contract for Non-Penny Classes when the order 
breakup percentage is greater than 40%. Orders in this segment with 
order break-up percentages of 40% or less will continue to receive the 
$0.60 per contract break-up credit. The Exchange proposes to add new 
footnote ``*'' after the PRIME Fee table that will provide the 
following: MIAX will apply an enhanced PRIME Break-up credit of $0.69 
per contract to the EEM that submitted a PRIME Order in Non-Penny 
Classes that is submitted to the PRIME Auction that trades with PRIME 
AOC Responses and/or PRIME Participating Quotes or Orders, if the PRIME 
Order experiences a break-up of greater than forty percent (40%).
    The decision to offer an alternative enhanced Priority Customer 
Break-up credit is based on an analysis of current revenue and volume 
levels and is designed to encourage Priority Customer order flow to 
PRIME Auctions.
Remove Discounted PRIME Response Fee for PCRP Tier 3 or Higher
    Next, the Exchange proposes to remove the discounted PRIME Response 
fee for standard options in Penny Classes and discounted PRIME Response 
fee for standard options in Non-Penny Classes for Members or their 
Affiliates that qualifies for Priority Customer Rebate Program 
(``PCRP'') volume tier 3 or higher.
    Currently 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. 
Transaction fees in mini-options will be 1/10th of the standard per 
contract fee or rebate described in the table above for the PRIME 
Auction. MIAX will assess the standard transaction fees to a PRIME AOC 
Response if it executes against unrelated orders. Any Member or its 
Affiliate \16\ that qualifies for Priority Customer Rebate Program 
volume tiers 3 or higher and submits a PRIME AOC Response that is 
received during the Response Time Interval and executed against the 
PRIME Order, or a PRIME Participating Quote or Order that is received 
during the Response Time Interval and executed against the PRIME Order, 
will be assessed a Discounted PRIME Response Fee of $0.46 per contract 
for standard options in Penny Program classes. Any Member or its 
Affiliate that qualifies for Priority Customer Rebate Program 
(``PCRP'') volume tiers 3 or higher and submits a PRIME AOC Response 
that is received during the Response Time Interval and executed against 
the PRIME Order, or a PRIME Participating Quote or Order that is 
received during the Response Time Interval and executed against the 
PRIME Order, will be assessed a Discounted PRIME Response Fee of $0.95 
per contract for standard options in non-Penny Program classes.
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    \16\ The term ``Affiliate'' means (i) an affiliate of a Member 
of at least 75% common ownership between the firms as reflected on 
each firm's Form BD, Schedule A, (``Affiliate''), or (ii) the 
Appointed Market Maker of an Appointed EEM (or, conversely, the 
Appointed EEM of an Appointed Market Maker). An ``Appointed Market 
Maker'' is a MIAX Market Maker (who does not otherwise have a 
corporate affiliation based upon common ownership with an EEM) that 
has been appointed by an EEM and an ``Appointed EEM'' is an EEM (who 
does not otherwise have a corporate affiliation based upon common 
ownership with a MIAX Market Maker) that has been appointed by a 
MIAX Market Maker, pursuant to the following process. A MIAX Market 
Maker appoints an EEM and an EEM appoints a MIAX Market Maker, for 
the purposes of the Fee Schedule, by each completing and sending an 
executed Volume Aggregation Request Form by email to 
[email protected] no later than 2 business days prior to 
the first business day of the month in which the designation is to 
become effective. Transmittal of a validly completed and executed 
form to the Exchange along with the Exchange's acknowledgement of 
the effective designation to each of the Market Maker and EEM will 
be viewed as acceptance of the appointment. The Exchange will only 
recognize one designation per Member. A Member may make a 
designation not more than once every 12 months (from the date of its 
most recent designation), which designation shall remain in effect 
unless or until the Exchange receives written notice submitted 2 
business days prior to the first business day of the month from 
either Member indicating that the appointment has been terminated. 
Designations will become operative on the first business day of the 
effective month and may not be terminated prior to the end of the 
month. Execution data and reports will be provided to both parties. 
See Fee Schedule, note 1.
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    The Exchange now proposes to remove both the Discounted PRIME 
Response Fee of $0.46 per contract for standard options in Penny 
Classes and the Discounted PRIME Response Fee of $0.95 per contract for 
standard options in Non-Penny Classes, and will remove the portion that 
describes the discounted fees from the accompanying footnotes. The 
purpose of this change is for business and competitive reasons.
Responder to cPRIME Auction Fee
    The Exchange proposes to amend the Fee Schedule to modify the 
transaction fees for Members that participate in the cPRIME Auction. 
Specifically, the Exchange proposes to amend the per contract Responder 
fee for Non-Penny Classes in a cPRIME Auction for all Origins in the 
cPRIME Fees table. Currently, the Exchange charges a Responder fee of 
$0.99 per contract for Non-Penny Classes in all Origins for a cPRIME 
Auction. The Exchange now proposes to increase the Responder fee to 
$1.10 per contract for Non-Penny Classes for all Origins in a cPRIME 
Auction.
    The purpose of adjusting the per contract Responder fee for Non-
Penny Classes for all Origins is for business and competitive reasons. 
In order to attract order flow the Exchange initially set its cPRIME 
rebates and fees so that they were meaningfully higher/lower than other 
options exchanges that provide a comparable complex order price 
improvement mechanism. The Exchange now believes that it is appropriate 
to further adjust these fees so that they are more in line with other 
exchanges,\17\ but will remain competitive such that it should enable 
the Exchange to continue to attract complex order flow to cPRIME 
Auctions and also maintain market share.
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    \17\ See supra note 15.
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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 \18\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \19\ in 
particular, in that it is an equitable allocation of reasonable 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 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

[[Page 57872]]

discrimination between customers, issuers, brokers and dealers.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that its proposal provides for the equitable 
allocation of reasonable dues and fees and is not unfairly 
discriminatory for the following reasons. The Exchange operates in a 
highly competitive market. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, 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.'' \20\ There are currently 
16 registered options exchanges competing for order flow. Based on 
publicly-available information, and excluding index-based options, for 
the month of September 2021, no single exchange has more than 
approximately 12%-13% of the market share of executed volume of 
multiply-listed equity and exchange-traded fund (``ETF'') options 
trades as of September 21, 2021.\21\ Therefore, no exchange possesses 
significant pricing power in the execution of multiply-listed equity 
and ETF options order flow. More specifically, as of September 21, 
2021, the Exchange had a market share of approximately 5.47% of 
executed volume of multiply-listed equity and ETF options for the month 
of September 2021.\22\
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    \20\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
    \21\ See MIAX's ``The Market at a Glance'', available at https://www.miaxoptions.com/ (last visited September 21, 2021).
    \22\ See id.
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    The Exchange believes that the ever-shifting market shares among 
the exchanges from month to month demonstrates that market participants 
can shift order flow, or discontinue or reduce use of certain 
categories of products, in response to transaction and/or non-
transaction fee changes. For example, on February 28, 2019, the 
Exchange's affiliate, MIAX PEARL, LLC (``MIAX Pearl''), filed with the 
Commission a proposal to increase Taker fees in certain Tiers for 
options transactions in certain Penny classes for Priority Customers 
and decrease Maker rebates in certain Tiers for options transactions in 
Penny classes for Priority Customers (which fee was to be effective 
March 1, 2019).\23\ MIAX Pearl experienced a decrease in total market 
share between the months of February and March of 2019, after the fees 
were in effect. Accordingly, the Exchange believes that the MIAX Pearl 
March 1, 2019, fee change may have contributed to the decrease in the 
MIAX Pearl's market share and, as such, the Exchange believes 
competitive forces constrain options exchange transaction fees and 
market participants can shift order flow based on fee changes 
instituted by the exchanges.
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    \23\ See Securities Exchange Act Release No. 85304 (March 13, 
2019), 84 FR 10144 (March 19, 2019) (SR-PEARL-2019-07).
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    Accordingly, competitive forces constrain the Exchange's 
transaction fees, and market participants can readily trade on 
competing venues if they deem pricing levels at those other venues to 
be more favorable. In response to the competitive environment, the 
Exchange offers specific rates and credits in its fee schedule, like 
those of other options exchanges', which the Exchange believes provides 
incentives to Members to increase order flow of certain qualifying 
orders.
    The Exchange believes its proposal to amend its Responder fees for 
Non-Penny Classes for all Origins in PRIME and cPRIME Auctions is 
reasonable, equitably allocated and not unfairly discriminatory because 
these changes are for business and competitive reasons. In order to 
attract order flow the Exchange initially set its rebates and fees for 
its PRIME and cPRIME Auctions so that they were meaningfully higher/
lower than other options exchanges that provide a comparable price 
improvement mechanisms. The Exchange now believes that it is 
appropriate to further adjust these fees so that they are more in line 
with those of other exchanges,\24\ but will remain competitive and 
should enable the Exchange to continue to attract order flow to PRIME 
and cPRIME Auctions and also maintain market share.
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    \24\ See supra note 15.
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    The Exchange also believes that its proposal to amend the Responder 
fees for Non-Penny Classes for all Origins in PRIME and cPRIME Auctions 
is not unfairly discriminatory as all Origins that respond to a PRIME 
or cPRIME Auction will be assessed an identical fee and access to the 
Exchange is offered on terms that are not unfairly discriminatory. The 
Exchange believes it is equitable and not unfairly discriminatory to 
increase the Responder fee as certain other option exchanges that offer 
similar price improvement functionality charge similar fees.\25\ The 
Exchange believes that it is appropriate to increase the fees so that 
they are more in line with other exchanges,\26\ and will still remain 
competitive such that they should enable the Exchange to continue to 
attract order flow to its PRIME and cPRIME Auctions and maintain market 
share.
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    \25\ See id.
    \26\ See id.
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    The Exchange believes its proposal to offer an enhanced PRIME 
Break-up Credit for Non-Penny Classes for Priority Customers is 
reasonable, equitably allocated and not unfairly discriminatory because 
this change is for business and competitive reasons. The Exchange 
believes that its proposal will encourage Priority Customer order flow 
to PRIME Auctions. Increased Priority Customer order flow benefits all 
market participants because it continues to attract liquidity to the 
Exchange by providing more trading opportunities. This attracts Market 
Makers and other liquidity providers, thus, facilitating price 
improvement in the auction process, signaling additional corresponding 
increase in order flow from other market participants, and, as a 
result, increasing liquidity on the Exchange.
    As noted above, the Exchange operates in a highly competitive 
market. The Exchange is only one of several options venues to which 
market participants may direct their order flow, and it represents a 
small percentage of the overall market. The Exchange believes that the 
proposed fees are reasonable, equitable, and not unfairly 
discriminatory in that at least one competing options exchange offers 
similar fees and credits in connection with similar price improvement 
auctions.\27\
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    \27\ The Cboe Exchange provides for a $0.60 per contract credit 
in Non-Penny classes. See Cboe Fee Schedule, ``Break-Up Credits,'' 
available at https://cdn.cboe.com/resources/membership/Cboe_FeeSchedule.pdf.
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    The Exchange believes its proposal to remove the discounted PRIME 
Response fees for Penny and Non-Penny Classes for Members who achieve 
Tier 3 or higher in the PCRP is reasonable, equitably allocated and not 
unfairly discriminatory because these changes are for business and 
competitive reasons. In order to attract order flow, the Exchange 
initially set its rebates and fees so that they were meaningfully 
higher/lower than other options exchanges that provide a comparable 
price improvement mechanism. The Exchange conducted an internal review 
and analysis of fees and rebates and determined that it was appropriate 
to

[[Page 57873]]

remove the discounted PRIME Response fees so that all PRIME response 
fees are more line with other exchanges,\28\ but will still remain 
highly competitive such that it should enable the Exchange to continue 
to attract order flow to PRIME Auctions and also maintain market share.
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    \28\ See supra note 15.
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    In addition, The Exchange believes that its proposal is consistent 
with Section 6(b)(5) of the Act \29\ because it perfects the mechanisms 
of a free and open market and a national market system and protects 
investors and the public interest because an increase in Priority 
Customer order flow will bring greater volume and liquidity to the 
Exchange, which benefits all market participants by providing more 
trading opportunities and tighter spreads. To the extent Priority 
Customer order flow is increased by this proposal, market participants 
will increasingly compete for the opportunity to trade on the Exchange 
including sending more orders and provided narrower and larger-sized 
quotations in the effort to trade with such Priority Customer order 
flow.
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    \29\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that increasing the Responder fees for PRIME 
and cPRIME Auctions is equitable and not unfairly discriminatory 
because the proposed fees will apply equally to all Origins that 
respond to PRIME and cPRIME Auctions. The Exchange believes that the 
application of this fee is equitable and not unfairly discriminatory 
because the fee is identical for all market participants that respond 
to PRIME and cPRIME Auctions.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\30\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intra-market or intra-market competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that its proposal will impose any burden on intra-
market competition that is not necessary or appropriate in furtherance 
of the purposes of the Act because its proposal to amend its Responder 
fees for PRIME and cPRIME Auctions is uniform and will be applied 
equally to all Origins that respond to PRIME and cPRIME Auctions.
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    \30\ 15 U.S.C. 78f(b)(8).
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    The Exchange does not believes its proposal to remove the 
discounted PRIME Response fees for Penny and Non-Penny Classes for 
Members who achieve Tier 3 or higher in the PCRP will impose any burden 
to intra-market competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange conducted an 
internal review and analysis of fees and rebates and determined that it 
was appropriate to remove the discounted PRIME Response fees so that 
all PRIME response fees are more line with other exchanges,\31\ but 
will still remain highly competitive such that it should enable the 
Exchange to continue to attract order flow to PRIME Auctions and also 
maintain market share. The removal of these fees will impact all 
Priority Customers equally.
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    \31\ See supra note 15.
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    The Exchange believes its proposal to offer an enhanced PRIME 
Break-up Credit for Non-Penny Classes for Priority Customers is 
reasonable, equitably allocated and not unfairly discriminatory because 
this change is for business and competitive reasons. The Exchange 
believes that its proposal will encourage additional Priority Customer 
order flow to PRIME Auctions. Increased Priority Customer order flow 
benefits all market participants because it continues to attract 
liquidity to the Exchange by providing more trading opportunities and 
tighter spreads.
    The Exchange does not believe that its proposal will impose any 
burden on inter-market competition that is not necessary or appropriate 
in furtherance of the purposes of the Act because, as noted above, 
other competing options exchanges currently have similar rebates in 
place in connection with similar price improvement auctions.\32\ 
Additionally, the Exchange operates in a highly competitive market. 
Members have numerous alternative venues that they participate on and 
direct their order flow to, including 15 other options exchanges, many 
of which offer substantially similar price improvement auctions. Based 
on publicly available information, no single options exchange has more 
than 12-13% of the market share.\33\ Therefore, no exchange possesses 
significant pricing power in the execution of option order flow. 
Participants can readily choose to send their orders to other exchanges 
if they deem fee levels at those other exchanges to be more favorable. 
Moreover, the Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. Specifically, in 
Regulation NMS, 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.'' \34\ The fact 
that this market is competitive has also long been recognized by the 
courts. In NetCoalition v. Securities and Exchange Commission, the D.C. 
Circuit states 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' . . .'' \35\ 
Accordingly, the Exchange does not believe its proposed fee changes 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.
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    \32\ See supra note 15.
    \33\ See supra note 21.
    \34\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005).
    \35\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. 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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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,\36\ and Rule 19b-4(f)(2) \37\ 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

[[Page 57874]]

whether the proposed rule should be approved or disapproved.
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    \36\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \37\ 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 [email protected]. Please include 
File Number SR-MIAX-2021-42 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-2021-42. 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-2021-42, and should be submitted on 
or before November 9, 2021.
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    \38\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-22689 Filed 10-18-21; 8:45 am]
BILLING CODE 8011-01-P


